Norwest Corporation and Subsidiaries, Successor in Interest to United Banks of Colorado, Inc., and Subsidiaries, et al. - Page 35

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          placed in service prior to 1989, as adjusted under former section           
          48(q) for the investment credits claimed and investment credits             
          recaptured with respect to those assets.  The reported                      
          accumulated depreciation equaled 48 percent of the depreciation             
          claimed on the Atrium Structure and the Skyway to the date of the           
          reported sale.  No gain or loss was reported as realized on the             
          sale of the underlying land because the reported amount realized            
          ($135,000) equaled the cost basis of the land.                              
               On its Federal income tax returns for the taxable years 1989           
          through 1991, the UBC affiliated group took deductions for rental           
          expenses on account of the Atrium Lease.                                    
                    d.  UBC's Financial Statements                                    
               In the notes to UBC's affiliated financial statements for              
          1988 and 1989, UBC made disclosures of the Atrium Sale Agreement            
          and the Atrium Lease as a sale and leaseback.                               
                    e.  Petitioner's Responses to Information Document                
                    Requests Regarding the Atrium                                     
               In a letter dated August 11, 1992, to the St. Paul office of           
          the Internal Revenue Service (IRS) Appeals Division (Appeals                
          Division), petitioner first claimed that the cost of the Atrium             
          Assets should be allocated to the bases of adjoining properties.            
          The Appeals Division referred petitioner's claim for cost                   
          allocation to the IRS Examination Division.                                 
               On January 11, 1993, the IRS agent assigned to review                  
          petitioner's claim (the IRS agent) issued an information document           





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