OPINION.
Van Fossan:
In our opinion the preponderance of the evidence shows that the petitioner had adopted as his basis of accounting a fiscal year ending May 31. In the preaffiliation period ended May 31, 1920, the petitioner filed its returns on the basis of a fiscal year ending May 31. It closed its books on that date and again on December 31 of each year. During affiliation, though the return for the affiliated group was on a calendar year basis, the petitioner continued to keep and close its books as formerly. In computing the income of the affiliated group, respondent adjusted the petitioner's income to a calendar year basis by a proration of income of the last part of one and the first part of another fiscal year. This action by the respondent was fully authorized and necessary to compute the total group income. But such action was not a consent to petitioner to change its basis of reporting income.
When the affiliation ceased during 1924, petitioner resumed its independent status and should have reported its income on the fiscal year basis.
Judgment will be entered for the respondent.