Tower Loan of Mississippi, Inc. - Page 2

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          wholly owned subsidiary pursuant to section 482.1  We hold that             
          it should not. (2) Whether petitioner can take a bad debt                   
          deduction pursuant to section 166 for the 1989 tax year.  We hold           
          that it cannot.                                                             
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts filed by the parties and its                       
          accompanying exhibits are incorporated herein by this reference.            
          At the time the petition was filed herein, petitioner, Tower Loan           
          of Mississippi, Inc., had its principal place of business in                
          Jackson, Mississippi.                                                       
               Petitioner is engaged in the business of making small                  
          consumer loans, ranging from $100 to $5,000.  Petitioner is not a           
          bank or a savings and loan association.  Petitioner was                     
          incorporated in 1972 as a business corporation under the                    
          Mississippi Business Corporation Act.  Petitioner used the                  
          accrual method of accounting during the years in issue.                     
               In February 1983, petitioner organized two wholly owned                
          subsidiary insurance companies, the American Federated Life                 
          Insurance Co. (AFLIC) and the American Federated Insurance Co.              
          (AFIC).  In addition to providing financing to its customers,               
          petitioner makes available credit life insurance to its                     

               1 All section references are to the Internal Revenue Code in           
          effect for the taxable years in issue, and all Rule references              
          are to the Tax Court Rules of Practice and Procedure, unless                
          otherwise stated.                                                           

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