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• Both corporations were producing and selling ice.
• Old company became financially embarrassed and non-profitable.
• Old company organized a new company to take over assets, liabilities, and operation of business. The business, also, consisted of same stockholders.
• The old corporation sustained a net loss. The old corporation had deductions in excess for the next succeeding taxable year when the corporation was transferred to the new corporation.
Where all the assets and business of an older corporation are taken over by a new corporation, Is the new corporation entitled to have its taxable income for the succeeding period computed and determined by deducting from its net income for that period the net losses sustained by the older corporation in the preceding period?
• “Whether there shall be deducted from that income the losses suffered by the old company in its conduct of the same business before the transfer.
• What is being taxed in this instance is the income realized by the new company in conducting the business after the transfer.”
|US-SUP-CT, [4 USTC ¶1292], New Colonial Ice Company, Inc., Petitioner, v. Guy T. Helvering, Commissioner of Internal Revenue, (May 28, |
NO, the supreme Court affirmed Circuit Court of Appeals’ decision that a “An original corporation and its successor were separate taxable entities and the second corporation was not entitled to deduct from its 1923 income a net loss of its predecessor for 1921 and for the partial year of 1922.
• “The two corporations were not identical but distinct. A corporation and its stockholders are...
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