- 2 -
Penalty
Taxable Year Ended Deficiency Sec. 6662(a)
Nov. 30, 1991 $42,422,470 --
Nov. 30, 1992 33,533,968 $547,619
The issue addressed in this opinion is whether income
relating to printed circuit assemblies (PCA's) should be
reallocated under section 482 to petitioner from its Singapore
subsidiary for its 1991 and 1992 fiscal years. (A separate
opinion will address issues, previously tried and briefed, of
whether petitioner's purchase and resale of American Depository
Receipts in 1992 lacked economic substance and whether petitioner
is liable for an accuracy-related penalty pursuant to section
6662(a). Petitioner has also filed a Motion for Summary Judgment
on the issue of whether petitioner is entitled to foreign tax
credits for certain United Kingdom Advance Corporation Tax
payments.) Unless otherwise indicated, all section references
are to the Internal Revenue Code in effect for the years in
issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Compaq Computer Corporation is a Delaware corporation with
its principal place of business in Houston, Texas. Compaq
Computer Corporation and subsidiaries filed consolidated Federal
income tax returns for the taxable years ended November 30, 1991,
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