
    J. Sklar Manufacturing Company, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 42080.
    Promulgated April 28, 1931.
    
      Max Schmerler, G. P. A., for the petitioner.
    
      W. Frank Gibbs, Esq., and O. W. &'weaker, Esq., for the respondent.
   OPINION.

Arundell:

Under the provisions of section 206 (e) of the Revenue Act of 1926, a taxpayer may take as a deduction in computing net income for the two succeeding taxable years a net loss sustained in 1923. The benefits of the statute, however, are available only to the taxpayer who sustained the loss. Brighton Corporation, 16 B. T. A. 945; Farmers & Merchants Bank, 21 B. T. A. 1383.

The basis for the claim being made by petitioner that it is entitled to deduct the 1923 net loss of the Steiner Company in computing its net income for 1925 is that the return filed by it for the taxable year is a consolidated return of the affiliated group, and includes the income of the Steiner Company. The contention has no foundation in the stipulated facts.

The stipulation merely shows that on January 2, 1924, the records of the Steiner Company were merged with those of petitioner and that in 1924 and 1925 the Steiner Company transacted no business. In the return petitioner filed for 1925 it stated that the return was not a consolidated return, and nothing of record discloses whether or not the Steiner Company had any income in 1925, and, if so, whether it was included in the return filed by petitioner. The fact that in 1924 and 1925 the products previously handled directly by the Steiner Company were sold by and entered on the books of petitioner, does not, in and of itself, prove that any income which may have been earned by the Steiner Company under such or other transactions was included in the return filed by petitioner. On the facts as presented to us we must conclude that the return filed by the petitioner for 1925 is not a consolidated return of income of both corporations. The respondent’s refusal to deduct the net loss of the Steiner Company for 1923, in computing petitioner’s net income for 1925, is sustained.

Decision will be entered for the respondent.  