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the percentage depletion calculations claimed on their original
Federal income tax returns. We hold they are not.3
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated into our findings by this reference. At the time
the petitions in these cases were filed, petitioners' principal
place of business was located in Houston, Texas. For
convenience, we present a general background section and combine
our findings of fact with our opinion under each separate issue.
General Background
Corporate Structure--1982 Reorganization
Until December 31, 1982, Old Petroleum (Employer
Identification Number, hereinafter EIN 74-6044301), a Delaware
corporation, was a subsidiary of Allied Corporation (Allied), a
New York corporation. Old Petroleum owned and operated 10
natural gas processing plants and held nonoperating interests in
additional gas processing plants. During that time, Old
Petroleum owned 100 percent of the stock of Texgas Corporation
(Texgas), a Delaware corporation, which was in the business of
retailing propane.
In a December 31, 1982, reorganization, Allied formed a new
corporation called Union Texas Petroleum Holdings, Inc.
(Holdings) (EIN 76-0040040) to serve as the parent of Old
3 We have considered each of the remaining arguments of the
parties and, to the extent that they are not discussed herein,
find them to be unconvincing.
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