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WOOLFORD REALTY CO., INC. V. ROSE, 286 U. S. 319 (1932)

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U.S. Supreme Court

Woolford Realty Co., Inc. v. Rose, 286 U.S. 319 (1932)

Woolford Realty Co., Inc. v. Rose

No. 582

Argued April 19, 20, 1932

Decided May 16, 1932

286 U.S. 319

Syllabus

1. The general principle underlying the income tax statutes ever since the adoption of the Sixteenth Amendment has been the computation of gains and losses on the basis of an annual accounting for the transactions of the year. P. 286 U. S. 326.

2. A taxpayer who seeks an allowance for losses suffered in an earlier year, must be able to point to a specific provision of the statute permitting the deduction, and must bring himself within its terms. Id.

3. The popular or received import of words furnishes the general rule for the interpretation of public laws. P. 286 U. S. 327.

4. A construction that would engender mischief should be avoided. P. 286 U. S. 329.

5. Section 206(b) of the Revenue Act of 1926, permitted any taxpayer who sustained a net loss in one year to deduct it in computing his net income for the next year and, if it exceeded that net income (computed without such deduction), to deduct the excess in computing the net income for the next succeeding ("third") year. By other provisions of the same Act, § 240(a) and (b) affiliated corporations could make consolidated returns of net income upon the basis of which the tax was to be computed as a unit and then be assessed to the respective corporations in such proportions as they might agree upon or, if they did not agree, then on the basis of the net income properly assignable to each.

Held:

(1) Where one of two corporations which became affiliated in 1927 had no net income that year, its net losses for 1925 and 1926 were not deductible in their consolidated return of net income for 1927. P. 286 U. S. 326.

(2) Each of the corporations joined in a consolidated return is nonetheless a taxpayer. The deduction of net loss is not permitted chanroblesvirtualawlibrary

Page 286 U. S. 320

by § 206(b) except from the net income of the corporation suffering the loss, and if there would be no net income for the current year though the earlier loss were to be excluded, there is nothing from which a deduction can be made. Id.

53 F.2d 821 affirmed.

Certiorari, 284 U.S. 615, to review the affirmance of a judgment, 44 F.2d 856, sustaining a demurrer to the petition in an action to recover money paid as income taxes. chanroblesvirtualawlibrary

Page 286 U. S. 324





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