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MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Petitioners sought redetermination of
deficiencies in their Federal income tax for the taxable years
ended September 30, 1981 (FY 1981) and September 30, 1982 (FY
1982) in the amounts of $620,347 and $85,612, respectively. The
deficiencies are attributable to the carryback of a net operating
loss arising from two deductions claimed on petitioners'
consolidated return for FY 1984. We must decide: (1) Whether
petitioners are entitled to a deduction under section 166(a)(1)1
with respect to accounts payable by a foreign subsidiary that
were canceled in FY 1984; and (2) whether petitioners are
entitled to a deduction under section 165(g) for loss of their
investment in the foreign subsidiary. We hold that neither
deduction was proper.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulations of fact and attached exhibits are incorporated
herein by this reference. Petitioners are an affiliated group of
corporations of which Wally Findlay Galleries International, Inc.
(WFGI), is the parent. At the time the petition was filed WFGI's
principal office was located in Chicago, Illinois. During FY
1 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the taxable years at issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
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