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stipulation of facts is incorporated in this opinion by reference
and found accordingly.
Intermet, a Georgia corporation, had its principal office in
Troy, Michigan, when it filed the petition in the instant case.
Intermet is the common parent of an affiliated group of
corporations (the group) that manufactures precision iron
castings for automotive and industrial equipment producers. For
calendar years 1984 through 1993, the group filed consolidated
Federal income tax returns. During those years, all members of
the group used the accrual method of accounting for both
financial accounting and Federal income tax purposes. Lynchburg
was a member of the group during each year from 1984 through
1993.
On its 1992 consolidated Federal income tax return, the
group reported a consolidated net operating loss (CNOL) in the
amount of $25,701,038. During October 1994, the group filed Form
1120X, Amended U.S. Corporation Income Tax Return, claiming a
carryback to 1984 for specified liability losses incurred during
1992, in the amount of $1,227,973. During 1992, the group's CNOL
exceeded the sum of the claimed specified liability losses.
Members of the group that claimed specified liability losses
reported separate taxable income, as defined in section 1.1502-
12, Income Tax Regs., and specified liability loss deductions as
follows:
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