Estate of Bernard H. Stauffer, Bonnie H. Stauffer v. Commissioner of Internal Revenue

The issue before us is whether § 381 of the Internal Revenue Code, 26 U.S.C. § 381 (1954), carryovers in certain corporate acquisitions, permits a loss sustained by the transferee corporation after a corporate reorganization to be carried back to a premerger taxable year of one of three transferor corporations. The Commissioner takes the position, sustained by the Tax Court below, that the reorganization falls within the definition of a statutory merger, 26 U.S.C. § 368 (a) (1) (A), and therefore the carry-back of net operating loss, 26 U.S.C. § 172 , is proscribed. Treas.Reg. § 1.381 (c) (1)-l(b), example (2). The taxpayer contends that the reorganization is one defined by § 368(a) (1) (F), “a mere change in identity, form, or place of organization,” and that such a loss carry-back is proper under § 381(b)-l(a) in accordance with § 172(b).

The facts were stipulated in the Tax Court. At all times relevant to the proceedings below, Bernard H. Stauffer was the sole owner of three corporations, Stauffer Reducing Inc., of California (Stauffer California), Stauffer Reducing, Inc., an Illinois corporation (Stauffer Illinois), and Stauffer Reducing, Inc., of New York (Stauffer New…