Microsoft Corporation - Page 2

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                                        MEMORANDUM OPINION                                              

                  JACOBS, Judge:  This matter is before the Court on the                                
            parties' cross-motions for partial summary judgment.  Both motions                          
            were filed pursuant to Rule 121.1                                                           
                  The issue presented by these motions is whether respondent is                         
            barred by the expiration of the statutory period of limitations                             
            from recalculating the amount of petitioner's affiliated group's                            
            combined taxable income under the section 936(h) profit-split                               
            method for the taxable years ended June 30, 1990 and 1991.  In this                         
            regard, we must interpret a restricted consent extending the                                
            limitation periods for 1990 and 1991 to a date subsequent to the                            
            issuance of the notice of deficiency to determine whether the                               
            language contained therein is sufficiently broad to permit                                  
            respondent to recalculate petitioner's affiliated group's combined                          
            taxable income under the section 936(h) profit-split method for the                         
            aforementioned years.  Both parties have submitted memoranda of law                         
            in support of their respective motions.                                                     
            Background                                                                                  
                  Microsoft Corporation (Microsoft or petitioner), a Washington                         
            corporation, had its principal place of business in Redmond,                                


                  1     Unless otherwise indicated, all section references are                          
            to the Internal Revenue Code as in effect for the matter under                              
            consideration, and all Rule references are to the Tax Court Rules                           
            of Practice and Procedure.                                                                  




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