RJR Nabisco Inc. (Formerly R.J. Reynolds Industries, Inc.) and Consolidated Subsidiaries - Page 62

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          $179 million payment.  We believe that petitioner may be mistaken           
          in concluding that the $179 million payment does not consist of             
          any unstated interest.  It appears that, in concluding that the             
          7.5-percent interest payment constitutes an adequate amount of              
          stated interest, petitioner overlooked the fact that the                    
          7.5 percent interest amount was calculated on the basis of a                
          principal amount that did not include the disputed item.  The               
          parties are directed to consult on that point and on the effect             
          of the various allocations petitioner made (and respondent                  
          accepted) in reporting the award in order to determine whether              
          there is adequate stated interest.  If the parties can resolve              
          the unstated interest issue, that resolution shall be reflected             
          in the Rule 155 calculation.  If the parties cannot resolve that            
          issue, they shall report that status to the Court so that the               
          Court may determine the appropriate action.                                 
               Except as may be necessary to reflect unstated interest,               
          petitioner is sustained in reporting the disputed item as a long-           
          term capital gain, and respondent’s determination of a deficiency           
          in tax is not sustained to that extent.                                     

                                                  Decision will be entered            
                                             under Rule 155.                          









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