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Petitioner is a corporation and is the parent company of a
group of corporations that files consolidated corporate income
tax returns. At the time the petition was filed, petitioner's
principal place of business was Minneapolis, Minnesota. The
issue presented by petitioner's motions arises over the legal and
accounting fees described above that were incurred during 1991 in
connection with the acquisition of the Davenport Bank and Trust
Co. and its merger into Bettendorf Bank, the latter of which is a
subsidiary of Norwest Corp.3 The merger of these two banks was
completed on January 19, 1992.
In petitioner's consolidated income tax return for 1991,
petitioner claimed, as an ordinary and necessary business
deduction, expenses incurred during 1991 regarding the expansion
of its financial services business (banking) within the
geographic area known as the "Quad Cities" of Davenport and
Bettendorf, Iowa, and Moline and Rock Island, Illinois, which
expansion resulted in the acquisition of the Bettendorf Bank and
the merger of that bank into petitioner's consolidated group.
Petitioner included with its Federal income tax return for 1991 a
3
Hereafter, references to petitioner include Norwest Corp.
and all its subsidiaries that are part of its consolidated group
that includes Davenport Bank and Trust Co. and Bettendorf Bank.
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