Bercy Industries, Inc., and Subsidiaries v. Commissioner of Internal Revenue

Appellant Bercy Industries, Inc. (Bercy), appeals from a decision of the Tax Court affirming a deficiency assessment by the Commissioner of Internal Revenue (the Commissioner). This court has jurisdiction pursuant to I.R.C. [26 U.S.C.] § 7482. Bercy contends that the Commissioner improperly denied it a loss carryback under section 381 of the Internal Revenue Code (the Code). Subsection (b)(3) of that section limits post-reorganization loss carry-backs by the surviving corporation of certain tax-free reorganizations. Surviving corporations in other tax-free reorganizations, however, are permitted carryback of post reorganization losses without special limitation. Bercy argues that either Congress intended that corporations that reorganize as Bercy did be permitted to carryback their post-reorganization losses, or Bercy’s reorganization qualifies as one of the types entitled to unrestricted carryback treatment. The Commissioner responds that the Code should be strictly construed and that Bercy does not qualify for unrestricted carryback treatment under the terms of section 381. We reverse.

I

Bercy Industries was incorporated in 1965. In 1968, a corporation named Beverly…