Nibur Bldg. Corp. v. Comm'r of Internal Revenue, Docket No. 115-68.

• Decision Date: 23 April 1970
• Docket Number: Docket No. 115-68.
• Parties: NIBUR BUILDING CORPORATION, AND ITS WHOLLY OWNED SUBSIDIARY, RALSTON STEEL CORPORATION, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

54 T.C. 835

NIBUR BUILDING CORPORATION, AND ITS WHOLLY OWNED SUBSIDIARY, RALSTON STEEL CORPORATION, PETITIONERS
v.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 115-68.

United States Tax Court

Filed April 23, 1970.

[54 T.C. 835]

Max A. Reinstein, for the petitioners.

William L. Ringuette, for the respondent.

Held, for taxable years commencing prior to Jan. 1, 1966, the portion of a consolidated net operating loss attributable to a subsidiary cannot be carried back to offset the income of the parent corporation in a separate return year prior to incorporation of the subsidiary.

OPINION FAY, Judge:

Respondent determined deficiencies and an overassessment in the Federal income tax of petitioners as follows:

+------------------------------------+
                ¦Year ¦Overassessment ¦Deficiency ¦
                +------+----------------+------------¦
                ¦1959 ¦ ¦$8,968.60 ¦
                +------+----------------+------------¦
                ¦1960 ¦ ¦30,337.69 ¦
                +------+----------------+------------¦
                ¦1963 ¦$2,211.00 ¦ ¦
                +------------------------------------+
                

The sole issue presented is whether the portion of a consolidated net operating loss attributable to a subsidiary can be carried back to offset the income of the parent corporation in a separate return year prior to incorporation of the subsidiary.

All of the facts have been stipulated. The stipulation of facts and the exhibits attached thereto are incorporated by this reference.

[54 T.C. 836]

Petitioners are Nibur Building Corp. (Nibur) and its wholly owned subsidiary Ralston Steel Corp. (Ralston No. 2). Both petitioners at all times pertinent have been incorporated in Illinois and have had their principal places of business in Chicago, Ill. Prior to March 1, 1961, Nibur was known as Ralston Steel Corp. (Ralston No. 1). On March 7, 1961, its name was changed to Nibur Building Corp. On that same date Ralston No. 2 was organized and received from Ralston No. 1 certain assets in exchange for 3,000 shares of its stock. Nibur, formerly known as Ralston No. 1, thereby became the parent company, owning 100 percent of the outstanding stock of Ralston No. 2.

The assets which Ralston No. 1 transferred to Ralston No. 2 included: Office furniture and fixtures, automobiles, and warehouse equipment, as well as other assets required to engage in the purchase and sale of steel. The assets which Ralston No. 1, now known as Nibur, retained were the buildings and building equipment.

For taxable years 1959 and 1960 Ralston No. 1 filed separate Federal corporate income tax returns with the district director of internal revenue, Chicago, Ill. For taxable years 1961 through 1963, Nibur and its subsidiary, Ralston No. 2, filed consolidated U.S. corporate income tax...