- 2 -
section references are to the Internal Revenue Code in effect for
the year 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 it filed its petition, petitioner's principal place of
business was in Towson, Maryland.
Petitioner filed a consolidated Federal income tax return
for 1984, on which it claimed an ordinary loss of $802,273
relating to the sale of its USMP stock. During and prior to
1984, USMP imported, manufactured, and marketed shoe materials;
imported, refurbished, marketed, and serviced shoe machinery; and
manufactured cutting dies for footwear and textile industries.
USMP resold machinery and materials produced by petitioner and
its subsidiaries, and consequently, USMP's costs of goods sold
consisted largely of purchases from such entities.
From 1980 through 1983, USMP's sales rapidly declined, while
its operating expenses rose. USMP's inability to reduce expenses
largely was due to labor costs. Approximately 75 to 80 percent
of the company's expenses were attributable to wages and
salaries. Under Portuguese law, employers who terminated
employees without cause were required to pay such employees at
least 3 months' severance pay for each year they had worked for
their employer. USMP attempted to reduce its labor costs by
Page: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011