Amdahl Corporation and Consolidated Subsidiaries - Page 2

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                 income tax purposes.  Held, further, P is entitled                   
                 to deduct payments to the RSC as ordinary and                        
                 necessary business expenses.  Sec. 162(a), I.R.C.                    

               Frederick R. Chilton, Jr., Janet S. Bianchi, Paolo M. Dau,             
          and John J. Steele, for petitioner.                                         
               Andrew P. Crousore and Ewan D. Purkiss, for respondent.                
               GERBER, Judge:  Respondent determined deficiencies in                  
          petitioner's Federal income tax as follows:                                 
                 Tax Year Ended              Deficiency                               
                 Dec. 30, 1983               $25,528,729                              
                 Dec. 28, 1984               6,245,206                                
                 Dec. 27, 1985               4,394,198                                
                 Dec. 26, 1986               4,038,178                                
               After concessions, the issue for decision is whether                   
          payments made by petitioner to relocation service companies to              
          assist in the disposition of the homes of its employees who                 
          relocate in connection with their employment are deductible                 
          against ordinary income or must be treated as a capital loss.               
                                  FINDINGS OF FACTS1                                  
               Petitioner is a Delaware corporation with its principal                
          place of business in Sunnyvale, California.  It develops,                   
          manufactures, markets, and services large-scale computer systems,           
          storage products, communications systems, software, and                     

               1The parties' stipulation of facts and the attached exhibits           
          are incorporated by this reference.                                         

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