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Burnet v. Aluminum Goods Manufacturing Co., 287 U.S. 544 (1933)

Burnet v. Aluminum Goods Manufacturing Co.


Argued December 13, 14, 1932

Decided January 9, 1933

287 U.S. 544


1. The purpose of requiring consolidated returns by affiliated corporations was to impose the war profits tax according to true net income and invested capital of what was, in practical effect, a single business enterprise, even though conducted by means of more than one corporation. P. 287 U. S. 547.

2. Primarily, the consolidated return was to preclude reduction of the total tax payable by the business, viewed as a unit, by redistribution of income or capital among the component corporations by means of inter-company transactions. Id.

3. A manufacturing corporation bought all the shares of another corporation and used it as its subsidiary for selling the goods manufactured. The subsidiary, after netting losses in several years preceding 1917, was liquidated in that year, and, in the year next following, dissolved. Held that the two corporations did not cease to be "affiliated" during the year 1917 (Rev. Act 1921, § 1331; Treas.Reg. 41, Arts. 77 and 78), and that, in making up their consolidated return of excess profits for that year, the loss of the

Page 287 U. S. 545

parent company's investment in the stock of the subsidiary, and the loss of moneys advanced by the one to the other for the business and not repaid were properly deducted from gross income after subtracting from their sum the subsidiary's operating loss in that year (Rev. Acts, 1916, § 12; 1917, § 206; Treas.Reg. 33, 1918 ed., Art. 147.) P. 287 U. S. 548 et seq.

56 F.2d 568 affirmed.

Certiorari to review the reversal of an order of the Board of Tax Appeals, 22 B.T.A. 1, sustaining the Commissioner's finding of a deficiency in a consolidated tax return.

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