Merrill v. COMMISSIONER OF INTERNAL REVENUE

SWAN, Circuit Judge.

This proceeding involves a deficiency in the petitioner’s income tax liability for the-year 1941, resulting from the disallowanceof a deduction of $41,281.28 claimed as a. net operating loss carry-over from 1940. Deduction for a net operating loss is allowed under § 23 (s) but is computed under § 122 of the Internal Revenue Code, 26-U.S.C.A. §§ 23(s) and 122. The correctness of the Tax Court’s approval of the Commissioner’s disallowance of the deduction is the sole question presented.

Joseph L. Merrill, the petitioner, filed his-income tax returns on the cash basis. Until…