H. S. Crocker Co. v. Commissioner
United States Board of Tax Appeals
1. Where two corporations are affiliated the consolidated net income is to be computed as for one corporation. 2. Where the parent corporation acquires the stock of its subsidiary at its book value and subsequently sells it at its book value, no profit or loss to the affiliated group results.
1Opinion of the Court
*539OPINION.
Phillips:
This case arises under section 240 of the Revenue Act of 1918, and the issue before the Board is this: Does the purchase by the parent company of the stock of its subsidiary at the then book value of the stock, and the sale of the stock at a later date at its then book value, result in taxable income or deductible loss? It is admitted that the companies were affiliated during the taxable j^ear involved.
Section 240 (b) (1) of the Revenue Act of 1918 says, in part, that:
For the purpose of this section two or more domestic corporations shall be deemed to be affiliated (1) if one…
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