*46 The fact that a corporation which joined in the filing of a consolidated return was found not to be a proper party to that return did not deprive this Court of jurisdiction in respect of a petition filed by such corporation in response to a notice from respondent asserting a deficiency against it.
*91 SUPPLEMENTAL FINDINGS OF FACT AND OPINION
A question has arisen, in connection with the entry of decision under Rule 50, as to the proper disposition to be made in respect of petitioner Little Theatre, Inc.
The deficiency notice herein was mailed to Intervest Enterprises, Inc. It reads in pertinent part as follows:
Intervest Enterprises, Inc.
c/o Sidney Farber
16 Court Street
Brooklyn, New York 11201Gentlemen:
In accordance with the provisions of existing internal revenue laws, notice is given that the determination of your income tax liability and that of your affiliated companies for the taxable years ended January 31, 1963 and January 31, 1964 discloses deficiencies in tax aggregating $ 121,038.55, additions to *48 the tax for negligence under Code section 6653(a) of $ 6,005.20 and additions to the tax for delinquency under section 6651(a) of $ 233.64. The attached statement shows the computation of deficiencies and additions to the tax. [Emphasis added.]
*92 The attached statement reads in pertinent part as follows:
| Tax Liability for the Taxable Years Ended | ||||
| December 31, 1963 | ||||
| December 31, 1964 | ||||
| Returns Examined | ||||
| Form | Years | |||
| Intervest Enterprises, Inc | 1120 | 1/31/63 | and | 1/31/64 |
| Subsidiary Companies: | ||||
| Rand American Fund, Inc | 1122 | 1/31/63 | and | 1/31/64 |
| Intervest & Associates, Inc | 1122 | 1/31/63 | and | 1/31/64 |
| Little Theatre Inc | 1122 | 1/31/64 | ||
The tax liability of Intervest Enterprises, Inc. and each subsidiary company named above is stated as provided for by the regulations prescribed under
| INCOME TAX | |||
| Taxable year ended | Deficiency | Negligence, | Delinquency, |
| section 6653(a) | section 6651(a) | ||
| January 31, 1963 | $ 934.55 | $ 233.64 | |
| January 31, 1964 | 120,104.00 | $ 6,005.20 | |
| Total | 121,038.55 | 6,005.20 | 233.64 |
The above deficiencies are based on the adjustments and explanations*49 set forth in detail below.
* * * *
The deficiencies and additions to the tax will be assessed severally against each corporation named above in accordance with the regulations provided under
[Emphasis added.]
The "Explanation of Adjustments" for the taxable year ended January 31, 1964, reads in pertinent part as follows:
| Taxable Year Ended January 31, 1964 | ||
| Consolidated taxable income disclosed by return | ||
| (loss) | ($ 98,830.73) | |
| Unallowable deductions and additional income: | ||
| (a) Net operating loss deduction (Little Theatre | ||
| Inc.) | $ 229,464.18 | |
| (b) Net operating loss deduction (Intervest | ||
| Enterprises, Inc.) | 9,644.00 | |
| (c) Cost of machinery | 94,033.66 | |
| 333,141.84 | ||
| Consolidated taxabale income adjusted | 234,311.11 | |
Explanation of Adjustments
(a) It has been determined that the Little Theatre, Inc. does not qualify for the privilege of filing a consolidated return with Intervest Enterprises, Inc. pursuant to
*93 Attached to the consolidated return for the taxable year ended January 31, 1964, was a Form 1122 entitled "Return of Information and Consent of Subsidiary Corporation Included in a Consolidated Tax Return." The form was signed by Little Theatre, Inc., designating Intervest Enterprises, Inc., as the "common parent corporation," and contained the following:
The above-named subsidiary corporation hereby (1) authorizes the above-named common parent corporation to make a consolidated income tax return on its behalf for the taxable year for which this form is filed and (2) authorizes such common parent corporation (or, in the event of its failure, the Commissioner or the District Director of Internal Revenue) to make a consolidated income tax return on its behalf for each taxable year thereafter for which a consolidated return must be made by the affiliated group under the provisions of the consolidated return regulations.
The above-named subsidiary corporation, in consideration of the privilege of joining in the making of a consolidated return with the above-named common parent corporation, hereby consents to and agrees to be bound*51 by the provisions of the above-mentioned regulations.
A timely single petition was filed by Intervest Enterprises, Inc., Rand American Fund, Inc., Intervest & Associates, Inc., and Little Theatre, Inc., which, among other things, alleged that respondent had erred in determining that Little Theatre, Inc., did not qualify for the privilege of filing a consolidated return with Intervest Enterprises, Inc., and the other corporations for the taxable year ended January 31, 1964.
In our opinion disposing of the substantive issues in this case (
In his original computation submitted under Rule 50, respondent sought entry of decision against all of the petitioners in respect of deficiencies in income tax for the taxable years ended January 31, 1963, and January 31, 1964, and an addition to tax under section 6651(a) 1 for the taxable year ended January 31, 1963. Petitioners countered with a proposed decision which accepted respondent's mathematical computations and*52 the entry of decision in respect thereof against Intervest Enterprises, Inc., Rand American Fund, Inc., and Intervest & Associates, Inc., but requested entry of decision of no deficiency in income tax for either of the taxable years in question and no addition to tax for the taxable year ended January 31, 1963, in respect of Little Theatre, Inc. Respondent then filed a motion to dismiss for lack of jurisdiction as to Little Theatre, Inc., and to *94 change the caption accordingly. In support of his motion, respondent asserted that, since we had held that Little Theatre, Inc., was not properly a member of the affiliated group, it necessarily followed that no statutory notice of deficiency could be considered as having been sent to Little Theatre, Inc. Neither petitioner nor respondent draws any distinction between the taxable year ended January 31, 1963, and the taxable year ended January 31, 1964.
The question before us concerns the jurisdiction*53 of this Court. It is clear that such a question is fundamental and must be decided whenever it appears, even, as is the case herein, after the conclusion of the trial.
The jurisdiction of this Court can be invoked only by the timely filing of a petition by a taxpayer to whom a notice of deficiency is addressed.
Clearly, if we had rejected respondent's contention and had held that Little Theatre, Inc., was a member of the "affiliated group" within the meaning of
*55 We are thus confronted with the question whether a notice of conditional deficiency is sufficient to confer jurisdiction on this Court under
Thus it is not the existence of a deficiency but the Commissioner's determination of a deficiency that provides a predicate for Tax Court jurisdiction. [Citations omitted.] Indeed, were this not true, then the absurd result would be that in every case in which this Court determined that no deficiency existed, our jurisdiction would be lost.
Compare
We think the principle enunciated in
A similar situation can arise in the context of the requirement that this Court's jurisdiction is confined to the years for which a deficiency is determined. Thus a deficiency based upon a determination that an item is income to a taxpayer in either of the years confers jurisdiction as to both years. 3
The fact that we have held that Little Theatre, Inc., was not a proper party to the consolidated tax return for fiscal 1964 is not determinative. In the first place, the return in question is recognized as a return of the petitioner, at least for certain purposes, e.g., the running of the period of limitations.
Finally, we turn to the question whether the sending of the notice of deficiency to the parent*59 corporation, Intervest Enterprises, Inc., constituted sufficient notice to Little Theatre for the purposes of
We see no need to dissect the intricacies of the relationship between respondent's regulations and the procedural requirements of this Court. Cf.
With respect to the taxable year ended January 31, 1963, Little Theatre, Inc., did not join in the consolidated return nor did it file a Form 1122 for that year. Respondent's notice referred to that corporation only in respect of the taxable year ended January 31, 1964. Clearly, there was no notice of deficiency as to Little Theatre, Inc., in respect of the taxable year ended January 31, 1963, and this Court is therefore without jurisdiction for that year in respect*62 of that corporation.
In view of the foregoing, insofar as concerns Little Theatre, Inc., a decision of no deficiency will be entered for the taxable year ended January 31, 1964, and the petition will be dismissed for lack of jurisdiction for the taxable year ended January 31, 1963.
Footnotes
1. All references are to the Internal Revenue Code of 1954, as amended.↩
2. Respondent made no attempt to dispute the amount of the net operating loss arising from Little Theatre, Inc.'s activities or to assert any deficiency separately against that corporation.↩
3. Cf. Harry A. Gerrish↩, a Memorandum Opinion of this Court dated Aug. 20, 1951.
4. We have no need in this proceeding to determine whether we would be in a position to determine an actual deficiency against Little Theatre, Inc. Compare
Commissioner v. Burer, 340 F.2d 112">340 F.2d 112 (C.A. 5, 1965), reversing a Memorandum Opinion of this Court. See fn. 2 supra↩.