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Unless otherwise indicated, 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.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. At
the time its petition was filed, petitioner maintained its
principal place of business in Minneapolis, Minnesota.
Petitioner is a Delaware corporation which filed
consolidated Federal income tax returns for itself and its
affiliated subsidiaries for the relevant taxable years. During
these years, petitioner and its subsidiaries were involved
primarily in the manufacture, processing, and distribution of
food products.
Mister Donut franchised Mister Donut pastry shops in the
United States and abroad. As of January 1989, there were
approximately 500 Mister Donut shops in the United States, 78
shops in Asia and the Pacific, and approximately 35 to 40 shops
1(...continued)
on the disposition of stock. Under the regulations, petitioner
would be able to elect retroactively to source its Paty stock
loss in the United States. See sec. 1.865-2(a)(1), (e)(2)(i),
Proposed Income Tax Regs., 61 Fed. Reg. 35696, 35698-35699 (July
8, 1996). On July 19, 1996, respondent filed a motion to sever
the Paty stock loss issue and hold it in abeyance pending the
filing of a status report by respondent in February 1997
regarding the finalization of the relevant regulations.
Respondent's motion to sever issue will be granted.
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