Nestle Holdings, Inc. - Page 3




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            opinion) with regard to remaining issues in the case.  See Nestle                          
            Holdings, Inc. v. Commissioner, T.C. Memo. 1995-441, affd. in                              
            part, revd. and remanded in part 152 F.3d 83 (2d Cir. 1998).  In                           
            the 1995 opinion, the Court (1) held that petitioner and                                   
            Carnation Co. (Carnation) were entitled to interest deductions of                          
            $131,739,791,3 (2) established the fair market value of various                            
            Carnation assets, and (3) concluded that Carnation (i.e.,                                  
            petitioner) had to recognize capital gains on the sale of those                            
            assets to Nestle S.A., a foreign entity.  The Court ordered the                            
            parties to submit computations under Rule 155.                                             
            1995 Advance Tax Payments                                                                  
                  On December 15, 1995, after the release of the 1995 opinion,                         
            but before the Court entered a decision, petitioner paid                                   
            respondent the following amounts (advance tax payments) on the                             
            deficiencies as anticipated by petitioner for the tax years in                             
            issue:                                                                                     
                        Taxable Year Ending     Advance Tax Payments                                   
                        Dec. 31, 1983                 $6,774,252                                       
                        Dec. 29, 1984                 31,222,100                                       
                        Dec. 28, 1985                 114,964,176                                      
            Initial Tentative Refunds and 1996 Motion To Strike                                        
                  On August 7, 1996, a stipulation by the parties with regard                          


                  3  During 1985, Carnation was acquired by and became a                               
            subsidiary of Nestle Enterprises, Inc., petitioner’s predecessor.                          
            For 1985, Nestle Enterprises, Inc., and Carnation filed a                                  
            consolidated return.  Petitioner has filed its petition as a                               
            successor in interest to Nestle Enterprises, Inc.                                          




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