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James R. McCann, David G. Glickman, Geoffrey R. Polma, and
Sally C. Helppie, for petitioner.
Gary F. Walker, Kim Palmerino, and William T. Lundeen, for
respondent.
SWIFT, Judge: Respondent determined a deficiency of
$978,567 with respect to Intergraph Corp. (Intergraph) and its
subsidiaries' consolidated 1987 Federal income taxes.
After concessions, the issues for decision are: (1) The
deductibility of a claimed $1,923,103 foreign currency loss and
of a claimed $520,432 interest expense; and (2) if the first
issue is decided against petitioner, the deductibility in the
year of payment of a $6,484,169 bad debt deduction claimed with
respect to a payment Intergraph made of a Japanese-yen-
denominated debt obligation.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1987.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
At the time the petition was filed, Intergraph was a
publicly held Delaware corporation with its principal place of
business in Huntsville, Alabama. During the relevant years,
Intergraph was the common parent of a group of affiliated
corporations engaged in the business of designing, manufacturing,
and marketing computer graphics and data base management systems.
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