Mar Monte Corporation v. United States

Before MOORE ELY, and CHOY, Circuit Judges.

Mar Monte Corporation [hereinafter “Mar Monte”] appeals from the District Court’s summary judgment in favor of the Government. The controversy involved a claim for refund of federal income taxes in the amount of $10,606, plus interest, paid by Mar Monte for its taxable year ending November 30, 1959. Since the facts are undisputed, disposition by summary judgment was appropriate. Fed.R.Civ.P. 56(c).

In August, 1960, Mar Monte timely filed its federal income tax return for its fiscal year of 1959 and paid taxes in the sum of $51,632. The 1959 income upon which the tax was imposed was solely the product of capital gains and thus did not reflect ordinary income. In each of the next three fiscal years Mar Monte sustained net operating losses. Since the 1959 income was the product of capital gains, the carryback provisions of section 172, Int.Rev.Code of 1954, were not applicable. Therefore, Mar Monte was unable to deduct the net. operting losses from its 1959 income.

Thereafter, the Commissioner of Internal Revenue [hereinafter “Commissioner”] determined that there was a deficiency in Mar Monte’s income taxes for its fiscal year…