-5-
Issue III. Allocation of Purchase Price ................. 64
A. FIA ....................................... 64
B. Federal's Acquisition of FIA .............. 66
C. Petitioner's Acquisition of FIA ........... 67
D. Petitioner's 1989 Return .................. 71
E. Notice of Deficiency ...................... 71
Discussion ................................... 71
F. Residual Value ............................ 72
G. Expert Witnesses .......................... 73
1. Petitioner's Expert .................... 74
2. Respondent's Expert .................... 75
3. Critique of Experts .................... 77
H. Conclusion ................................ 80
OPINION
JACOBS, Judge: In docket No. 20567-93, respondent determined
deficiencies in petitioner's 1987 and 1988 Federal income taxes in
the respective amounts of $93,413 and $3,999,398, as well as
additional interest under section 6621(c) for 1988. Pursuant to an
amended answer filed on September 23, 1994, respondent increased
the amount of the 1988 deficiency to $4,644,201.
In docket No. 26213-93, respondent determined a deficiency in
petitioner's 1989 Federal income tax in the amount of $10,532,064.
Respondent increased the amount of the 1989 deficiency to
$22,757,717 pursuant to an answer filed on February 14, 1994, and
further increased the deficiency amount to $22,791,923 pursuant to
a September 22, 1994, amendment to answer.
These cases were consolidated for trial, briefing, and
opinion.
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