*2740 A corporation which filed separate returns for 1922 and 1923 may not subsequently file consolidated returns for those years.
*1073 This is a proceeding for the redetermination of income taxes for the calendar years 1922 and 1923, for which years the Commissioner determined deficiencies of $315.45 and $1,484.53, respectively. Only one allegation of error was set forth in the petitioner. It was as follows:
The respondent erred in failing to tax the petitioner as a subsidiary of the Associated Theatres, inc., from October 31, 1922, to December 31, 1923.
At the hearing the petitioner was allowed to amend his petition to allege error on the part of the Commissioner in failing to allow sufficient depreciation on a lease.
FINDINGS OF FACT.
The petitioner was incorporated under the laws of the State of New York on May 15, 1915, and during the taxable years had its principal office at Gloversville, N.Y. The petitioner, the Associated Theaters, Inc., and Corning Opera House Co., Inc., were affiliated within the meaning of the Revenue Act from*2741 October 31, 1922, to December 31, 1923. These three companies were also thus affiliated with the Newark Theaters, Inc., from May 1, 1923, to December 31, 1923. On October 31, 1922, the Associated Theaters, Inc., paid $30,000 for the entire capital stock of the petitioner. At that time the par value of the outstanding capital stock of the petitioner was $25,000. Its only asset was a lease of the Regent Theater. This lease had been acquired by the Geneva Theaters, Inc., on about the 8th day of June, 1915, at which time the lease and a mortgage to secure performance of the said lease, together with the benefit of $12,000 advance payments of rent were assigned to the corporation in consideration of $17,000 in cash and $300 par value of the capital stock of the petitioner. The lease was to run for 10 years from December 31, 1914, with the privilege of renewal.
The petitioner filed separate returns for the calendar year 1922 and for the calendar year 1923. Later, consolidated returns for all *1074 of the calendar year 1923 and for a portion of the year 1922 were prepared and forwarded to the Commissioner. The latter, however, did not recognize any right in the petitioner*2742 to file consolidated returns for the periods in question, did not accept the consolidated returns nor recognize them in the determination of the deficiencies, but, on the contrary, determined the deficiencies on the basis of separate returns for the periods in question.
OPINION.
MURDOCK: In , we held in part as follows:
Section 240(a) of the Revenue Act of 1921, provides that corporations which are affiliated within the meaning of that section, may, for any taxable year beginning on or after January 1, 1922, make a separate return, or, under regulations prescribed by the Commissioner, make a consolidated return. The statute, thus, in the case of affiliated corporations, provides two ways in which returns may be filed. Either return is a correct and proper return, but the return that is filed is the only return recognized by law and upon which the taxes due thereunder shall be computed and determined.
In that case we denied the right of the petitioner to file a consolidated return after it had once filed a separate return. The facts in the present case are similar and, following the principles laid down in the above mentioned*2743 case, we now hold against the petitioner and in favor of the Commissioner on this point. See also ; . We need not mention other reasons why we could not change the Commissioner's determination on such an allegation of error and the proof offered.
The petitioner, by amendment at the time of the hearing, alleged an additional error to the effect that the Commissioner had not allowed a proper deduction for the exhaustion of a lease. Counsel for the respondent denied that proper allowance for exhaustion of the lease was disallowed by the Commissioner. The petitioner has failed to show what the Commissioner did in regard to the exhaustion of this lease in his determination of the deficiency. The petitioner's contention that $30,000 representing the cost of the petitioner's stock to the Associated Theaters, Inc., on October 31, 1922, should be spread over the then remaining life of the lease is incorrect. The lease was not offered in evidence nor was there any testimony in regard to the provision of renewal. In this state of the record we will not disturb the*2744 Commissioner's determination.
Judgment will be entered for the respondent.