- 232 -
Rybak v. Commissioner, 91 T.C. at 566. Accordingly, we decide
the issues set forth below.
2. Issues With Respect to LTD
a. We hold that LTD is liable for the branch profits
tax imposed pursuant to section 884 for its taxable years ended
1988 and 1989;35
b. we hold that LTD is liable for the environmental
tax imposed pursuant to section 59A.
3. Issues With Respect to INC
a. We hold that INC is not entitled to deductions
claimed for legal and audit expenses for its taxable year ended
1986;
b. we hold that the net operating loss deduction
claimed by INC should not be increased for its taxable year ended
1985 and should not be decreased for the taxable year ended 1986;
c. we hold that the investment credit claimed by INC
should not be increased for its taxable year ended 1985 and
should not be decreased for its taxable year ended 1986.
4. Issues With Respect to Holdings
a. We hold that Holdings is not entitled to deductions
claimed for legal and audit fees for its taxable year ended 1987;
35
Petitioners state that the branch profits tax is "to a large
extent, a computational issue which will depend on whether LTD
was engaged in a U.S. trade or business and to what extent, if
any, its income was effectively connected to such a business."
Petitioners make no argument concerning the issue, and we
consider it to have been conceded. Rybak v. Commissioner, 91
T.C. 524, 566 (1988).
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