8
The following losses are in dispute:
Acctg fees re: Acctg fees re: Prof.
Tax audited financial employee benefits fees
year statements and SEC financial Re: IRS
ending regis. statements statements audit
11/30/89 $631,109 $34,450 --
11/30/90 552,000 24,500 --
11/30/91 337,700 24,500 $140,186.50
11/30/92 287,500 17,200 427,787.50
Petitioners reported that they had losses on their 1989,
1990, 1991, and 1992 returns, part of which petitioners carried
back as specified liability losses under section 172(b)(1)(C) to
the year ending November 30, 1985. Petitioners reported taxable
income of more than $6,484,484 on the returns they originally
filed for 1985. Petitioners' specified liability losses included
payments to their public auditors and to the SEC in connection
with petitioners’ compliance with the 1934 Act and ERISA and
payments for legal and accounting services in connection with the
IRS audits.
The parties agree that the SEC and ERISA professional fees
and the IRS examination expenses described above are deductible
under chapter 1.
Discussion
The parties have stipulated the amount of petitioners’ net
operating losses. The only issue for us to decide is whether
petitioners may carry those losses back 10 years or 3 years.
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