enacting these provisions differs significantly from the purposes underlying the consolidated return provisions. See Covil Insulation Co. v. Commissioner, supra at 375, where we stated that "the law relating to consolidated returns is unique. It is designed to coordinate the details of treating several corporations as a tax unit." Perhaps the "lack of parallelism" between these sections and the consolidated return regulations "is difficult to justify as a policy matter." See Bittker & Eustice, Federal Income Taxation of Corporations and Shareholders, p. 15-69 (1971 ed.). Compare Salem, "How to use net operating losses effectively under the new consolidated return regulations," 26 J. Taxation 270 (1967). But, such considerations are for the Congress, not the courts, to resolve. See United States v. Correll, 389 U.S. 299, 306-307 (1967). 6 We have already noted that the predecessors of respondent's regulations, which contained the same prohibition insofar as this case is concerned, have been sustained. Phinney v. Houston Oil Field Material Co., supra. See also Likins-Foster Honolulu Corp. v. Commissioner, supra. We have also noted that prior to 1928 Congress recognized the brother-sister relationship in the consolidated return area. See p. 44, supra. But, even in such a context, losses from separate return years were limited. See Woolford Realty Co. v. Rose, supra. Moreover, the legislative history of the consolidated return provisions of the Code demonstrates that Congress fully expected that respondent's regulations would not allow loss carryovers incurred by one corporation prior to a consolidated return year to be deducted in the return for that year beyond the amount of that corporation's income in that return, even where the same shareholders controlled both corporations prior to consolidation. Section 141(b) of the Internal Revenue Code of 1939, as amended by sec. 159, Revenue Act of 1942, ch. 619, 56 Stat. "We note that in Phinney v. Houston Oil Field Material Co. the Court of Appeals quoted extensively from Libson Shops v. Koehler, 353 U.S. 382 (1957), and that petitioner argues that the latter case has no applicability under the 1954 Code. We see no need to address the question of the continued vitality of Libson Shops (see Bittker & Eustice, Federal Income Taxation of Corporations and Shareholders pp. 1665 to 16-69 (1971 ed.)); we do not read Phinney v. Houston Oil Field Material Co. as making Libson Shops the sine qua non of its resolution of an issue in the consolidated return area. 858, is, in all respects material herein, identical to the language contained in section 1502 of the 1954 Code. Regs. 104, section 23.31(b)(2)(iii)(C) and (D), as amended by T.D. 5244, 1943 C.B. 439, 452, promulgated pursuant to section 141(b), provided that certain net operating losses incurred by a corporation, prior to the first year in which its income was included in the consolidated return, were to be included in the consolidated net operating loss carryovers. However, section 23.31(d)(3) of the same regulations limited the carryover from such a taxable year to the net income of the loss-incurring corporation included in consolidated net income for the year to which the loss was to be carried over. In Regs. 129, applicable to taxable years ending after December 31, 1949, the general carryover of the preconsolidation-losses provision and the limitations therein present in Regs. 104, sections 23.31(b)(2)(iii)(C) and (D) and 23.31(d)(3), were repromulgated in sections 24.31(a)(3) and 23.31(b)(3) without any change material for our purposes herein. These provisions were incorporated virtually intact into H.R. 8300, 83d Cong., 2d Sess., secs. 1523 and 1623 (1954). In H. Rept. No. 1337, 83d Cong., 2d Sess. (1954), the Committee on Ways and Means stated (p. 87): Since the Revenue Act of 1928, the law has provided that the Secretary is to prescribe regulations, legislative in character, giving detailed rules for the filing of a consolidated return by an affiliated group of corporations. Since these regulations have been generally accepted and have become stabilized, your committee has inserted them into the law, changing them only to the extent necessary to reflect other changes your committee has made elsewhere in the Code. The provisions were eliminated from the bill in the Senate. The reason for this change is stated in S. Rept. No. 1622, 83d Cong., 2d Sess. 120 (1954): While your committee recognizes that these regulations have been generally accepted, your committee believes that it is more appropriate to have these detailed rules in the form of regulations rather than in the statute. In this form they may be readily amended without necessary congressional action. * The prior loss carryover provisions were repromulgated under section 1502 as section 1.1502-31(a)(3) and (b)(3), Income Tax Regs., without any significant change, and were in effect for taxable years beginning prior to January 1, 1966. For subsequent years, the regulations in question were in effect. The 1966 regulations modified the long-established rule that losses of a corporation incurred in a year in which a separate return was filed cannot be carried over in an amount greater than the taxable income of the loss-incurring corporation, but only if the loss-incurring corporation was the common parent. In sum, the basic rule of the challenged regulation has existed in the regulations since 1943. It is a well-settled principle that— Treasury regulations and interpretations long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval and have the effect of law. See Helvering v. Winmill, 305 U.S. 79, 83 (1938); Hanover Insurance Co. v. Commissioner, 65 T.C. 715, 719 (1976). Where, as here, the legislative history clearly demonstrates congressional approval of the regulations, it certainly cannot be said that the regulations are beyond the scope of the legislative mandate. We hold that petitioner is not entitled to carry over the losses incurred by River Hills prior to March 2, 1970, to the taxable years in question. Because of certain concessions, Decision will be entered under Rule 155. GEORGE A. AND MARJORIE M. TURNER, PETITIONERS V. Docket No. 457-75. Filed April 21, 1977. P was furnished with a house by, and for the convenience of, his employer, but P had to purchase utilities, carpeting, and a heater, for which he was not reimbursed. Held, the utilities, carpeting, and heater were not furnished by the employer within the meaning of sec. 119, I.R.C. 1954, and hence, their cost is not excludable from income under that provision. George A. Turner, pro se. Lawrence G. Becker, for the respondent. SIMPSON, Judge: The Commissioner determined a deficiency in the petitioners' 1972 Federal income tax in the amount of $184.98. The only issue for decision is whether the petitioner may exclude or deduct from income under section 119, I.R.C. 1954,1 the amounts he paid for utilities, carpeting, and a heater for a home furnished for the convenience of his employer. FINDINGS OF FACT Some of the facts have been stipulated, and those facts are so found. The petitioners, George A. Turner and Marjorie M. Turner, husband and wife, resided in California when they filed their timely petition herein. They timely filed a joint Federal income tax return for 1972 with the Internal Revenue Service Center, Ogden, Utah. Mr. Turner will sometimes be referred to as the petitioner. From June 1969 through 1972, the petitioner was employed as a welder by American Forest Products Corp., a sawmill. He was the only welder employed by the sawmill in its maintenance shop and was required to be available for call 24 hours a day. The sawmill, for its convenience, required the petitioner to live in a house furnished by it and located within the Sequoia National Forest. As a rental charge, the sawmill deducted $306 from the petitioner's 1972 salary. When the petitioner and his wife moved into the house, they found the flooring had been removed and the living room floor covered by tar paper. They made several requests to the sawmill to have new flooring put in, but since nothing had been done after a year, the petitioner purchased carpeting during 1972 at a cost of $266.16. The house was without a heater, and the petitioner purchased one during 1972 for $262.58. The sawmill did not provide the petitioner with utilities; the petitioner had to contact the utility companies and set up his own accounts with them. During 1972, he paid $283.89 for gas and $209.88 for electricity. He has received no reimbursement from the sawmill for the costs of the utilities, the heater, or the carpeting. On their 1972 Federal income tax return, the petitioners deducted all of the costs paid by Mr. Turner in connection 1 All statutory references are to the Internal Revenue Code of 1954, as in effect during the year in issue. with the home, $1,328.51, which included the $306 rent deducted from his salary by the sawmill. In his notice of deficiency, the Commissioner disallowed $1,022.51 of such expenditures on the ground that the petitioner had failed to substantiate their payment, allowing him to deduct only the $306 rental payment. In an amended answer, the Commissioner raised the issue that the disallowed expenditures were not excludable or deductible under section 119. OPINION The petitioner maintains that under section 119,2 he was entitled to deduct the expenditures in issue.3 As the Commissioner recognizes, he bears the burden of proving the inapplicability of section 119, because it was not until his amended answer that he alleged that the amounts in issue were neither excludable nor deductible under such provision. Rule 142(a), Tax Court Rules of Practice and Procedure. In accordance with his position set forth in Rev. Rul. 68579, 1968-2 C.B. 61, the Commissioner agrees with the petitioner that utilities or other commodities which are necessary to make a lodging habitable constitute "lodging" for purposes of section 119. Nevertheless, the Commissioner contends that the statute only applies to "lodging furnished [the] employer" and the items paid for by the by * * * 2 SEC. 119. MEALS OR LODGING FURNISHED FOR THE CONVENIENCE OF THE EMPLOYER. There shall be excluded from gross income of an employee the value of any meals or lodging furnished to him by his employer for the convenience of the employer, but only if (2) In the case of lodging, the employee is required to accept such lodging on the business premises of his employer as a condition of his employment. In determining whether meals or lodging are furnished for the convenience of the employer, the provisions of an employment contract or of a State statute fixing terms of employment shall not be determinative of whether the meals or lodging are intended as compensation. 3 Although the petitioner claimed a deduction for the costs at issue on his return and framed his case in terms of a sec. 119 deduction, such provision does not authorize any deductions. However, because the petitioner is without counsel, we have not disposed of the case on this ground; instead, we have treated his claim as one for the excludability of such amounts. See Tougher v. Commissioner, 51 T.C. 737, 744 (1969), affd. per curiam 441 F.2d 1148 (9th Cir. 1971), cert. denied 404 U.S. 856 (1971). |