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ARGUMENT.

UNDER THE PROVISIONS OF SECTION 381 (b) OF THE

INTERNAL REVENUE CODE OF 1954, THE POST-

MERGER NET OPERATING LOSS SUSTAINED BY

ASSOCIATED MACHINE CAN BE CARRIED BACK

TO OFFSET PRE-MERGER INCOME OF ASSOCIATED

MACHINE SHOP IF THE MERGER OF ASSOCIATED

MACHINE SHOP AND J & M ENGINEERING (NOW

ASSOCIATED MACHINE) WAS A REORGANIZA-

TION OF THE TYPE DESCRIBED IN SECTION 368 (a)

(1) (F) OF THE INTERNAL REVENUE CODE OF 1954.

Section 381(b) of the Internal Revenue Code of

1954 defines the circumstances under which a net

operating loss sustained by a corporation acquiring

property in a reorganization could be allowed as a

carryback against income of the distributing cor-

poration :

"(b) Operating Rules - Except in the case of

an acquisition in connection with a reorganization

described in subparagraph (F) of Section 368-

(a)(1)-

"(3) The corporation acquiring property in a

distribution or transfer described in subsection

(a) shall not be entitled to carry back a net op-

erating loss for a taxable year ending after the

date of distribution or transfer to a taxable year

of the distributor or transferor corporation."

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archive.org Volume Name: govuscourtsca9briefs3471

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