- 13 -
Total tax liability 2,972 -0- -0-
On its tax return for its fiscal 1981, Kenmore showed (1) a
tentative investment credit in the amount of $8,449, (2) an
income tax liability before investment credit in the amount of
$298, and (3) application of the investment credit to eliminate
the income tax liability. In the notice of deficiency,
respondent allowed $8,151 investment credit and $617 new jobs
credit for Kenmore’s fiscal 1981.
On February 16, 1982, Kenmore filed an application for
tentative refund of the $2,972 fiscal 1980 tax liability.7
Respondent refunded this amount to Kenmore. The fiscal 1980
deficiency that respondent determined results entirely from this
refund.
On each of its tax returns for its fiscal 1980, 1981, and
1982, Kenmore reported that it did not pay any compensation to
Gleave.
7 In the answer in the Kenmore docket, respondent states
that the fiscal 1980 refund claim was based on a claimed fiscal
1981 net operating loss. In the reply, Kenmore agrees. On
brief, however, respondent states that the claimed carryback was
of an investment credit. Neither side explains how Kenmore could
have had a net operating loss from its fiscal 1981, when it
reported taxable income of $1,755 on its fiscal 1981 tax return.
Nor does either side explain the mechanics of either a net
operating loss carryback or an investment credit carryback from
Kenmore’s fiscal 1981 to Kenmore’s fiscal 1980. See secs.
172(b)(2) (opening flush language); 46(b)(1).
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