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Robert A. Warwick and Frederick H. Robinson, for
petitioners.
Lindsey D. Stellwagen and Kristine A. Roth, for respondent.
OPINION
TANNENWALD, Judge: Respondent determined deficiencies in
petitioners' 1987 and 1988 Federal income taxes in the amounts of
$430,030 and $357,028, respectively. The sole issue remaining in
dispute is whether petitioners are entitled to a capital loss
deduction for 1987, under section 165(f),1 with respect to
certain convertible debentures issued by a wholly owned
subsidiary and convertible into the stock of the common parent
corporation.
All the facts have been stipulated. The stipulation of
facts and attached exhibits are incorporated herein by this
reference.
Petitioners are the Reynolds Metals Company and Consolidated
Subsidiaries (the Reynolds Group). The common parent is Reynolds
Metals Company (hereinafter referred to as Metals). Metals is a
Delaware corporation with its principal place of business in
Richmond, Virginia. Metals and its consolidated subsidiaries
1 Unless otherwise indicated, all statutory references are to the
Internal Revenue Code in effect for the year in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
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