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section 351 or sections 354, 355, and 368(a)(1)(D) (except as
required by such sections or section 357(c)), and that pursuant
to section 355 neither petitioner nor Pilkington Holdings
recognized any gain or loss upon the exchange of LOF Glass, Inc.,
shares for the LOF shares.
Before February 19, 1986, income, deductions, and credits
with respect to the LOF Glass Division were included in
petitioner's return. From February 19, 1986, through April 28,
1986, deductions and credits with respect to LOF Glass, Inc. (the
subsidiary), were included as part of petitioner's consolidated
return. After April 28, 1986, LOF Glass, Inc., was no longer
part of petitioner, petitioner's affiliated group, or
petitioner's consolidated Federal income tax return.
On its 1986 consolidated return, petitioner did not include
any amount of ITC recapture with respect to the LOF Glass, Inc.,
section 38 assets. Respondent determined that a $5,718,749 ITC
recapture arose from the April 1986 transaction. Petitioner does
not dispute the amount of the ITC recapture, should the Court
hold petitioner liable for it.
Discussion
The investment tax credit provisions, now repealed but in
effect in respect of the taxable year 1986, provided for a tax
credit to taxpayers purchasing certain types of property for use
in their businesses. Whether petitioner is required to recapture
its investment tax credit turns upon the impact of a revenue
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