
    Appeal of IMPERIAL DEVELOPMENT CO.
    Docket No. 4183.
    Submitted November 11, 1925.
    Decided February 13, 1926.
    A foreign corporation was in existence during 1911, 1912, and 1913, and during each of those years sustained a net loss in the operation of its business. Held, that such corporation is not entitled to have its profits taxes computed under section 205 (a) (1) of the Eevenue Act of 1917.
    
      Frank G. Butts, O. P. A., for the taxpayer.
    
      Ward Loveless, Esq., for the Commissioner.
    Before Phillips and Trammell.
    Taxpayer appeals from the determination of a deficiency of $5,387.97 income and profits taxes for 1917.
    FINDINGS OP FACT.
    1. Taxpayer is a foreign corporation, organized and operating under the laws of Mexico.
    '2. During the years 1911, 1912, and 1913, and each of them, the taxpayer sustained net losses.
    3. The Commissioner determined the invested capital of the taxpayer for 1917 to be $1,056,547.33, allowed 7 per cent of that amount as the war-excess-profits-tax deduction under Title II of the Revenue Act of 1917, and determined the deficiency upon that basis.
    DECISION.
    The determination of the Commissioner is approved.
   OPINION.

Phillips

: The Commissioner determined taxpayer’s profits tax for 1917 under the provisions of section 203 (a) and (c) of the Revenue Act of 1917. Taxpayer claims that such tax should have been computed under the provisions of section 205, on the ground that the taxpayer had no net income from the trade or business during the pre-war period. Section 205 (a) (1) refers specifically to domestic corporations, while taxpayer is a foreign corporation. Taxpayer claims, however, that it falls within section 203 (d), in that it is impossible satisfactorily to determine the average amount of the annual net income of the trade or business during the pre-war period, and that, in such a case, a foreign corporation may fall within the provisions of section 205 (a) (1). Without passing upon the question raised by the taxpayer, it is sufficient to point out that there is a marked difference between inability to determine the average amount of the annual net income of the trade or business during the pre-war period and the determination that during the pre-war period the taxpayer had no net income from the trade or business. The taxpayer has not shown that its average net income for the pre-war period can not be determined, and it does not fall within the provisions of section 203 (d).  