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Our task in connection with these motions is to determine the
proper methodology to be used in calculating the amount of
petitioner's "regular tax deduction" for purposes of computing its
minimum tax liability under section 56 for the years at issue.
All Rule references are to the Tax Court Rules of Practice and
Procedure. All section references are to the Internal Revenue Code
in effect for the years at issue.
Background
Petitioner is a group of affiliated corporations, the common
parent of which is Norwest Corporation. At the time the petition
was filed, petitioner’s principal place of business was
Minneapolis, Minnesota.
During each of the years at issue herein (1983, 1984, and
1986), the affiliated group filed consolidated Federal income tax
returns. On these consolidated returns, petitioner reported the
amount of its minimum tax under section 56(a) by computing what
each member's minimum tax liability would have been had it filed a
separate return and then aggregated these amounts. In computing
each member's minimum tax liability, petitioner calculated each
member's tax preference items, as well as each member's regular tax
deduction, on a separate return basis.
Respondent determined that petitioner improperly calculated
its regular tax deduction which, according to respondent, resulted
in petitioner’s overstating its regular tax deduction and
understating its consolidated minimum tax liability. Consequently,
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Last modified: May 25, 2011