Helms Bakeries v. Commissioner of Internal Revenue

This is a second appeal in a case involving determination of federal excess profits taxes for the calendar years 1943, 1944 and 1945. The decision of this Court on the first appeal appears in 9 Cir., 236 F.2d 3 .

The issues presented to the Tax Court, whose decision was reviewed on the first appeal, related exclusively to the petitioner’s right to relief under section 722 of the Internal Revenue Code of 1939 for the calendar years above stated. Petitioner was in existence during the entire base period — 1936 to 1939 inclusive —and was entitled to use an excess profits credit based on income under the provisions of section 713 of the Code, 26 U.S.C.A. Excess Profits Taxes, § 713. The pertinent sections before the Court were 722(b) (2) and section 722(b) (4). Specifically, the petitioner rested its claim to the right to section 722 relief for the taxable years upon two grounds: (1) that its base period earnings were depressed, by reason of a price war within the purview of section 722(b) (2); and (2) that it had increased its capacity for production and operation within the purview of section 722(b) (4). After trial, the Tax Court held that petitioner was not entitled to any relief…