Economy Sav. & Loan Co. v. Commissioner
United States Tax Court
Petitioner, an Ohio building and loan corporation engaged principally in the business of making chattel loans, conducted its affairs on a cash basis for a fiscal year ending September 30. Prior to February 1, 1940, petitioner was exempt from taxation under section 101 (4), Internal Revenue Code. On that date it changed its methods of operation and thereafter it was not exempt from taxation.
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Petitioner, an Ohio building and loan corporation engaged principally in the business of making chattel loans, conducted its affairs on a cash basis for a fiscal year ending September 30. Prior to February 1, 1940, petitioner was exempt from taxation under section 101 (4), Internal Revenue Code. On that date it changed its methods of operation and thereafter it was not exempt from taxation. Petitioner filed an income tax return for the 12-month period ended September 30, 1940, reporting as taxable only a prorationed share of its net income for such period, in the belief that it was entitled…
1Opinion of the Court
OFINION.
Hill, Judge-.
The underlying question is, When did petitioner’s taxable year begin ? If, as petitioner contends, its taxable year began October 1, 1939, petitioner is not subject to excess profits taxes or the income tax rates imposed by the Second Revenue Act of 1940, which applies only to taxable years beginning after December 31, 1939. Petitioner claims that the change in its business activities whereby it lost its exempt status under the Revenue Act of 1938 did not change its accounting period. It contends that its taxable year is the full 12 months commencing October 1, 1939, and…
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