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Frederick E. Henry, Jeffrey M. O'Donnell, and Julie C. H.
Walsh, for petitioners.
Nancy B. Herbert and Reid M. Huey, for respondent.
OPINION
TANNENWALD, Judge: Respondent determined the following
deficiencies in petitioner's Federal income taxes and additions
to tax:
Addition to Tax
Year Deficiency Sec. 6661(a)
1985 $ 117,988 --
1986 11,630,928 $1,429,687
1987 4,924,255 --
1988 834,875 --
After concessions, the issue for decision is whether petitioner
is liable for recapture in 1986 of investment tax credits (ITC)
claimed on certain section 381 assets that were transferred to a
wholly owned subsidiary, the stock of which was then transferred
out of the consolidated group in a tax-free transaction. If this
issue is resolved in favor of respondent, then the issue of the
addition to tax under section 6661(a), which relates only
to the recapture issue, will have to be decided.2
1 Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the taxable years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
2 An additional issue, relating to the allocation of deductions
(continued...)
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