United Dominion Industries, Inc. v. United States (532 U.S. 822)
U.S. Supreme Court · decided June 4, 2001 · Supreme Court Database (Spaeth)
- Citation
- 532 U.S. 822 · 121 S. Ct. 1934
- Decided
- June 4, 2001
- Term
- October Term 2000
- Vote
- 8–1
- Majority author
- Justice Souter
- Issue area
- Federal Taxation
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Souter delivered the opinion of the Court. Under § 172(b)(l)(I) of the Internal Revenue Code of 1954, a taxpayer may carry bach its “product liability loss” up to 10 years in order to offset prior years’ income. The issue here is the method for calculating the product liability loss of an affiliated group of corporations electing to file a consolidated federal income tax return. We hold that the group’s product liability loss must be figured on a consolidated basis in the first instance, and not by aggregating product liability losses separately determined company by company. I A “net operating loss” results from deductions in excess of gross income for a given year. 26 U. S. C. § 172(e). Under § 172(b)(1)(A), a taxpayer may carry its net operating loss either backward to past tax years or forward to Mure tax years in order to “set off its lean years against its lush years, and to strike something like an average taxable income computed over a period longer than one year,” Libson Shops, Inc. v. Koehler, 353 U.S. 382, 386 (1957). Although the normal carryback period was at the time three years, in 1978, Congress authorized a special 10-year carryback for “product liability loss[es],” 26 U. S. C. § 172(b)(l)(I), since, it understood, losses of this sort tend to be particularly “large and sporadic.” Joint Committee on Taxation, General Explanation of the Revenue Act of…
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