Hawaiian Trust Co. v. United States

Appellant taxpayer seeks recovery of federal income taxes paid under protest for the years 1953 and 1955. Appellant is trustee for the creditors and stockholders of Pacific Refiners, Ltd., a dissolved corporation, hereinafter referred to as Refiners. Two questions are presented: (1) whether Refiners was entitled to carry forward as a consolidated net operating loss to 1953 the net operating loss suffered in 1950 by its subsidiary, Hilo Gas Company, Ltd., hereinafter referred to as Hilo Gas; and (2) whether Refiners was entitled to deduct in 1955 Territory of Hawaii income taxes allocable to capital gains from sales in liquidation of Refiners, the gain not being recognized for federal income tax purposes by reason of Section 337, Internal Revenue Code of 1954, 26 U.S.C. § 337 . Both questions were decided adversely to appellant by the trial court. See 178 F.Supp. 637 . The case was submitted on an agreed statement of facts.

Was Taxpayer Entitled to Deduct Loss Carry-over in 1953 Consolidated Return?

The facts pertinent to a determination of the first issue may be summarized as follows:

Refiners, a corporation organized under the laws of Hawaii on May 31, 1949, and dissolved on…