Facts
On 11 March 2003, the Federal Court handed down a judgment in case 2A.587/2002. Company [A. AG] , represented by Roesler Treuhand, had filed a complaint against the canton of Zurich, the Zurich Cantonal Tax Administration, and the DFTA of the canton of Zurich. The case concerned the deduction of prior losses for tax periods 1999 and 2000.
Company [A. AG] had incurred losses from 1994 to 1997. For the 1998 tax period, it had not filed a tax return and had been estimated according to the rules of art. The company had been taxed on a net profit of 1,000 Swiss francs and equity of 50,000 Swiss francs for the 1998 tax period. This decision had become final.
For the 1999 and 2000 tax periods, company [A. AG] had been taxed on net profits of 23,400 Swiss francs and 10,971 Swiss francs, respectively. The company had requested the deduction of prior losses, but this request had been rejected. The company had then filed a complaint with the DFTA of the canton of Zurich, which had rejected the complaint on 28 October 2002.
Considerations
The Federal Court examined the question of whether company [A. AG] could deduct prior losses for tax periods 1999 and 2000. The Court recalled that, according to Article 67 of the Federal Direct Tax Act, losses may be deducted from the net profit of the tax period, but that this deduction is limited to losses incurred during the preceding seven years.
The Court also recalled that, if a company is taxed on a net profit and does not contest this decision, it can no longer deduct prior losses for subsequent tax periods. The Court considered that, in the present case, company [A. AG] had been taxed on a net profit for the 1998 tax…