McLaughlin v. Pacific Lumber Co., 293 U.S. 351 (1934)

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McLaughlin v. Pacific Lumber Co.

No. 125

Argued November 12, 13, 1934
Decided December 10, 1934
293 U.S. 351

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

1. In an action at law tried without a jury, where both parties move at the close for judgment on the evidence and judgment is rendered for the plaintiff, the question whether the evidence was sufficient to warrant the judgment is a reviewable question of law. P. 355.

2. Consolidated income tax returns of affiliated corporations must truly reflect taxable income of the unitary business, and may not be employed to enable the taxpayer to use more than once the same losses for reduction of income. P. 355.

3. As ground for an action by a corporation to recover the amount of an income tax assessed on a consolidated return and voluntarily paid by the plaintiff, the plaintiff claimed that losses that accrued to it during the tax year by reason of the liquidation in that year of one of its subsidiaries, viz., the loss of the plaintiff’s investment in the subsidiary’s stock and of money advanced to it amounting, above all credits, to more than the amount of the tax, should have been deducted in the tax computation. Held, that the burden was upon the plaintiff to prove that the losses claimed were not the reflections of losses suffered by the subsidiary and which had been allowed for in the returns and tax assessments for that and prior years, and that, upon the evidence, the burden was not sustained, and the defendant’s motion for judgment in his favor should have been granted. P. 356.

66 F.2d 895 reversed.

Certiorari to review a judgment affirming a judgment against the Collector in an action to recover an alleged overpayment of income tax.