*98OPINION.
Moeris :Is the petitioner entitled to deduct the aggregate net loss of $53,528.44 alleged to have been sustained in 1921 and 1922 by the Standard Silica Sand Company and Belrose Sand Company, two predecessor corporations, in the determination of its net taxable income for 1923?
Section 204 (b) of the Revenue Act of 1&21 permits a “ taxpayer ” to deduct a net loss sustained by it from the net income of said “ taxpayer ” for the succeeding taxable year. Our question, therefore, resolves itself into whether the petitioner here should be treated as the “ taxpayer ” and afforded the privilege under the law of deducting the net losses of its predecessor corporations.
One of the theories upon which the petitioner relies to bring itself within the purview of the Act is that under the following quoted sections of the Illinois statute it stands in the place and stead of the predecessor corporations, occupies the same position, and should be recognized as the “ taxpayer ”:
*99When such merger or consolidation has been effected, the merged or consolidated corporation shall be a single corporation in accordance with the terms and provisions of the resolutions so adopted and approved, and shall be subject to all the duties and liabilities, and have all the rights and privileges, immunities and powers of a corporation formed under this Act.
Such single corporations shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises, as well of a public as a private nature, and all property, real, personal and mixed, and all debts due on whatever account, as well as for stock subscription and all other things in action, of, or belonging to, each of such corporations, and be subject to all the restrictions, liabilities and duties of each of such corporations so merged or consolidated. All property, rights, privileges, immunities, powers and franchises and all and every other interest shall thereafter be as effectually the property of the single corporation as they were of the several and respective merging or consolidating corporations. The title to any real estate, whether by deed or otherwise, under the laws of this State, vested in any of such corporations, shall not revert or be in any way impaired by reason of such merger or consolidation.
All rights of creditors and all liens upon the property of either of such merging or consolidating corporations shall be preserved unimpaired, and all debts, liabilities and duties of the respective corporations shall henceforth attach to such single corporation and may be enforced against it to the same extent as if such debts, liabilities and duties had been incurred or contracted by it. Any action or proceeding pending by or against one of the corporations merged or consolidated may be prosecuted to judgment, as if such merger or consolidation had not taken place, ■ or the merged or consoli-' dated corporation may be substituted in its place.
We can not see how the above quoted sections of the Illinois statute are of any assistance in determining the application of the net loss provision of the Federal taxing statute. Although, under the State statute, the successor corporation possesses the rights, powers, and franchises of the predecessor corporations, such statute can not be construed as identifying a taxpayer under the Federal taxing statute or designating the corporation entitled to the benefits thereof. Such determination must rest upon the Federal statute itself.
The question of the right of a successor corporation to the benefits of the net loss provision when the losses were sustained by a predecessor corporation was before us in The Maytag Co., 17 B. T. A. 182. The Maytag Company of Iowa wishing to increase its authorized capital stock and finding its plan impracticable under the laws of that State, organized a new corporation, the petitioner there, under the laws of the State of Maine. The Iowa corporation having sustained a net operating loss in 1921, the new corporation sought the deduction thereof in 1922. The Board considering the doctrine as laid down in Weiss v. Stearn, 265 U. S. 242, and Marr v. United States, 268 U. S. 536, said:
So bere we have corporations organized under the laws of different States and presumably having different rights and powers, and, while both had the *100same amount of preferred stock, there was a change in common stock from 12,201.5 shares of $100 par to 80,000 shares of no par. These changes are matters of substance and not to be lightly disregarded. * * *
And it Reid that the petitioner, the new corporation, was not the same taxable entity as the old and was not entitled to the deduction of the net loss claimed. Cf. Rosenbaum Bros., Inc., 11 B. T. A. 736.
The petitioner’s counsel argues that Marr v. United Stated, supra, forms the basis for the decision in The Maytag Co., supra, and that since all of the corporations involved in this proceeding were organized and incorporated under the laws of the State of Illinois, Weiss v. Stearn, supra, is controlling and that the opposite conclusion from that in the Maytag case should be reached. The concurring Justices of the Supreme Court in Weiss v. Stearn, supra, in their dissenting opinion in Marr v. United States, state:
Weiss v. Stearn did not turn upon the relatively unimportant circumstance that the new and old corporations were organized under the laws of the same State, but upon the approved definition of income from capital as something severed therefrom and received by the taxpayer for his separate use and benefit. * * *
If the foregoing cases just discussed contain any controlling principles relative to the issue here presented, it would seem tó be that where two or more corporations reorganize, the business and assets of which are not materially changed and the stockholders receive nothing actually severed from their original capital interest — nothing differing in substance from what they already had, then in such a ssase the legal distinction in corporate entity should be ignored. See dissenting opinion, Marr v. United States, supra.
The Maytag case does not stand for the proposition that the place of incorporation is the deciding factor. In that case the Board, applying the test of substantive as distinguished from merely formal changes, found that incorporation in different States, with different rights and powers and a radical change in the capital structure, were substantial changes which could not be ignored.
From the meager facts stipulated in the instant proceeding we can not say positively whether the change which took place was substantial or not. Nor can we find from the record that the stockholders received nothing differing in substance from what they already had. Indeed, it is reasonable to assume that the stockholder’s new interest was something different and more valuable possibly than his former holding. There were two predecessor corporations, not affiliated for income tax purposes, hence we may say that there were, no doubt, two separate sets of stockholders owning interests in individual corporations having different assets and *101liabilities. After the consolidation and the petitioner issued its entire capital stock for the entire stock of the predecessor corporations, the individual stockholders of said predecessors acquired interests in a single corporation owning the combined wealth of the two predecessors. Or, differently stated, each stockholder of each of the old corporations received in exchange for his interest in the assets of a single corporation an interest in the combined assets of two corporations. For these reasons we are of the opinion that the doctrine of Weiss v. Stearn can not be followed.
We are of the opinion that the petitioner is not the “ taxpayer ” within the meaning of section 204(b) of the Revenue Act of 1921 as defined by section (2) of said Act and is, therefore, not entitled to deduct from its not income net losses sustained by its predecessor corporations.
Reviewed by the Board.
Judgment will be entered for the respondent.