Pettit v. Commissioner of Internal Revenue

The taxpayers, having in 1931 bought an orange grove in California, and having operated it at a loss (except for one year) sold the land and equipment constituting the business plant in 1942 at a loss of $27,023. The Commissioner allowed $4,-264 of this loss to be carried back to eliminate the net income in 1941, and refunded the tax for 1941. Taxpayers sought in 1943 to carry forward the remaining $22,-759 of the 1942 loss as a deduction in 1943, claiming it to be a “net operating loss” under Internal Revenue Code, Sec. 23(s) and Sec. 122(b) (2), 26 U.S.C.A. §§ 23(s), 122 (b) (2). The…