International Multifoods Corporation and Affiliated Companies - Page 4

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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             

          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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