assessed and were due upon notice and demand. The extinguishment of the tax liability for the fiscal year 1941 resulted, not from a determination that the taxes as assessed were illegal but from the application of Section 122(b). The application of this section abolished the right of the defendant to collect the deficiency taxes but not his right to collect the interest as compensation for the plaintiff's delay in their payment.
I. The liability of the plaintiff for the interest assessed on the deficiency taxes for the fiscal year 1941 was not extinguished upon the application of Section 122(b) of the Internal Revenue Code. The defendant lawfully applied the sum of $ 4,513.34 to the payment of the interest on the deficiency taxes for the said year. Judgment in favor of the defendant and against the plaintiff must, therefore, be entered.
II. Pursuant to Rule 58 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, a judgment in favor of the defendant and against the plaintiff will be entered forthwith by the Clerk of the Courts.
'Section 23. Deduction from gross income.
'In computing net income there shall be allowed as deductions: * * *
'(s) Net Operating Loss Deduction. For any taxable year beginning after December 31, 1939, the net operating loss deduction computed under section 122.' 26 U.S.C.A.Int.Rev.Code, § 23.
'Section 122. Net operating loss deduction.
'(a) Definition of Net Operating Loss. As used in this section, the term 'net operating loss' means the excess of the deductions allowed by this chapter over the gross income, with the exceptions, additions, and limitations provided in subsection (d).
'(b) Amount of carry-back and carry-over.
'(1) Net operating loss carry-back. If for any taxable year beginning after December 31, 1941, the taxpayer has a net operating loss, such net operating loss shall be a net operating loss carry-back for each of the two preceding taxable years, except that the carry-back in the case of the first preceding taxable year shall be the excess, if any, of the amount of such net operating loss over the net income for the second preceding taxable year computed (A) with the exceptions, additions, and limitations provided in subsection (d)(1), (2), (4), and (6), and (B) by determining the net operating loss deduction for such second preceding taxable year without regard to such net operating loss.' 26 U.S.C.A.Int.Rev.Code, § 122.
'292. Interest on deficiencies.
'(a) General rUle. Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax, at the rate of 6 per centum per annum from the date prescribed for the payment of the tax (or, if the tax is paid in installments, from the date prescribed for the payment of the first installment) to the date the deficiency is assessed, * * * .' 26 U.S.C.A.Int.Rev.Code, § 292.