Textron, Inc. v. United States

The majority opinion allows a conglomerate taxpayer to turn a multimillion dollar loss into a profit of approximately half a million dollars. The full import of this holding is that, whenever a corporate subdivision of a conglomerate has sustained substantial losses and becomes worthless, the parent corporation can, by acquiring a profitable business and placing it within the worthless corporate shell of its subsidiary, take a double deduction: one, by the parent for its worthless stock and debt, and, two, by the new business by way of a net operating loss carryover. This shell game means…