The Dayton Rubber Company v. Commissioner of Internal Revenue

The petitioner is an Ohio corporation which for many years prior to its “base period” (fiscal years ended October 31, 1937, to October 31, 1940, inclusive) had been engaged in the manufacture of tires and tubes, belts, rollers, and miscellaneous products. In 1938 the petitioner set up a new textile division, and during the remainder of its base period it had an overall net loss on the business of this new division. The income from its other activities in the last two years of its base period, however, substantially exceeded its income from such business in the first two years of its base…