2
Net operating losses generally may be carried back
3 years. Sec. 172(b)(1)(A), I.R.C. However, specified
liability losses may be carried back 10 years. Sec.
172(b)(1)(C), (f)(1)(B), I.R.C. Ps treated their
losses as specified liability losses and carried them
back to their tax year ending Nov. 30, 1985.
Held, Ps' regulatory compliance costs are not
specified liability losses.
Stephen P. Kresnye and Joseph A. Castrodale, for
petitioners.
Elsie Hall, for respondent.
OPINION
COLVIN, Judge: This case is before the Court on
petitioners’ motions for partial summary judgment.
Respondent determined the following deficiencies in
petitioners' Federal income tax:
Petitioner Year Ending Deficiency
Sealy Corp. Nov. 30, 1983 $225,754.00
Sealy Corp. Nov. 30, 1984 648,717.48
Ohio Mattress Co. Dec. 30, 1984 3,630,737.24
Sealy Corp. Nov. 30, 1985 64,678.74
Ohio Mattress Co. Dec. 31, 1985 49,863.34
Sealy Corp. Nov. 30, 1986 6,816,632.00
Ohio Mattress Co. Dec. 30, 1986 447,617.00
Sealy Corp. Nov. 30, 1988 13,115,655.00
Petitioners seek a partial summary judgment relating to
their net operating loss carrybacks. They contend that
$2,447,933 of expenses they incurred from 1989 to 1992 is
specified liability losses under section 172(f)(1)(B) and thus
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