Continental Equities, Inc. v. Commissioner, Docket No. 7224-70

• Decision Date: 25 July 1974
• Docket Number: Docket No. 7224-70,6451-73.
• Parties: Continental Equities, Inc. v. Commissioner.
• Court: U.S. Tax Court

33 TCM (CCH) 812

1974 TC Memo 189

T.C. Memo. 1974-189.

Continental Equities, Inc. v. Commissioner.

Docket Nos. 7224-70, 6451-73.

United States Tax Court.

Filed July 25, 1974.

Robert A. Shupack, 1300 N.W. 167th St., Miami, Fla., and Eugene M. Short, Jr., for the petitioner. Joel Gerber, for the respondent.

Memorandum Opinion

TANNENWALD, Judge:

Respondent determined the following deficiencies in petitioner's Federal income tax:

                    Taxable year
                  ended August 311        Deficiency
                        1966 ................  $29,971.38
                        1967 ................   15,599.23
                        1968 ................   36,727.89
                        1969 ................   45,248.04
                        1970 ................   49,808.44
                

Petitioner is a Florida corporation whose principal place of business was in Coral Gables, Florida, at the time of filing its petition herein. Petitioner filed its Federal income tax return for 1966 with the district director of internal revenue, Jacksonville, Florida, and its returns for 1967 through 1970 with the Director of the Southeast Service Center, Internal Revenue Service, Chamblee, Georgia.

All of the facts herein have been stipulated. Petitioner concededly had net operating losses for its taxable years 1964 and 1965. The question before us is whether those losses, as respondent contends, should be held to be fully absorbed by petitioners' net long-term capital gain for the taxable year 1966, a year in which the alternative tax under section 1201 applies,² or whether, as petitioner contends, it is entitled to carry forward such losses to subsequent eligible years before us³ in which the regular tax under section 11 applies. The parties agree that petitioner should prevail unless we decide to depart from our holding in Chartier Real Estate Co. Dec. 29,601, 52 T.C. 346 (1969), affirmed per curiam, 70-1 USTC ¶ 9429 428 F. 2d 474 (C.A. 1, 1970).

Respondent urges us to reconsider the correctness of our holding in Chartier. This Court and others have considered and followed that holding on numerous occasions in the recent past.⁴ Respondent's brief herein simply reiterates arguments, albeit with some refinement, which were fully considered and rejected either in Chartier or its progeny. We remain convinced of the soundness of Chartier and follow it in this case.⁵

In order to reflect the concessions of the parties in regard to other issues,

Decisions will be entered under Rule 155.

1 Petitioner's taxable years ending August 31 will hereinafter be denoted by the calendar years in which they end.

2 Statutory references are to the Internal Revenue Code of 1954, as amended and in effect during the years in issue.

3 The last year before us in which the 1964 net operating loss can be used is the taxable year 1969 and the last year in which the 1965 net operating loss can be used is the taxable year 1970. See section 172(b) (1) (B). No claim that such losses should be carried back under section 172(b) (1) (A) (i) is involved herein.

4 Olympic Foundry Co.v. United States, an unreported case (W.D. Wash. 1972, 29 A.F.T.R. 2d 75-759, 72-1 USTC ¶ 9299), affirmed per curiam, 493 F. 2d 1247 (C.A. 9, 1974); Naegele v. United States, — F. Supp. — (D. Minn. 1973, 32 A.F.T.R. 2d 73-5689, 73-2 USTC ¶ 9696); Sidney Axelrod Dec. 32,107, T.C. Memo. 1973-190, on appeal (C.A. 6, Feb. 8, 1974); Mutual Assurance Society of Va. Corp. Dec. 32,084(M), T.C. Memo....