James Clark McReynolds

“ The claim of right to offset the net loss of 1924 against 1925 gains cannot prevail, unless the requirements of the quoted section, Revenue Act of 1924, are met-the loss must have been 'attributable to the operation of a trade or business regularly carried on by the taxpayer.'
In support of their position petitioners say:
The losses of the manufacturing corporation were not the losses of the taxpayers. They do not seek to disregard the corporate entity, but respect it. Taken as a whole, this entity constituted a part of the individual trade or business of Hubert Dalton. ”

“ If, for any taxable year, it appears upon the production of evidence satisfactory to the commissioner that any taxpayer has sustained a net loss, the amount thereof shall be allowed as a deduction in computing the net income of the taxpayer for the succeding taxable year (hereinafter in this section called 'second year') and if such net loss is in excess of such net income (computed without such deduction) , the amount of such excess shall be allowed as a deduction in computing the net income for the next succeeding taxable year hereinafter in this section called 'third year') ”