L. H. Pierce v. United States of America, United States of America v. Lena L. Pierce

The Pierces of Portland, Oregon, are husband and wife who filed separate federal income tax returns for the years 1946 and 1948. Their net incomes as reported for 1946 were over $65,000 each. In 1948 after deductions they had no net income and were required to pay no tax. Naturally out of their misfortunes in 1948 they are looking for “loss carry-backs” to 1946 as a basis for refunds on their taxes that year. Claiming the loss carry-backs to Í946, the taxpayers in June, 1949, filed claims for refunds which the commissioner never allowed. Consequently the taxpayers filed separate suits for refund against the United States in December, 1954, in the United States District Court for the District of Oregon. In those suits the wife prevailed and the husband was denied relief. The losing party in each case has appealed and the appeals have been consolidated.

Some detail of the financial operations of the Pierces is required. They formed a partnership in 1935 known as the L. H. Pierce Auto Service. The partnership was in continuous existence through 1948, and may still exist. In 1946 and perhaps for some years prior thereto this partnership engaged principally in the manufacture of…