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short-year, and that the entire CNOL is attributable to Acme in
accordance with section 1.1502-79(a)(3), Income Tax Regs.4
Several consequences arise from the Service's determination. The
first consequence is that no portion of the $13,180,810 CNOL
sustained by Acme for its 1986 short taxable year is allowable as
a carryback to Acme's (i.e., the group's) 1985 taxable year.
Secondly, the entire $13,180,810 CNOL is allowable as a carryback
to Acme's (i.e., the group's) 1984 taxable year. The final
consequence is that there are no excess investment tax credits
and/or credits for increasing research activity arising during
Acme's (i.e., the group's) 1984 taxable year that can be carried
back to Acme's (i.e., the group's) 1981 taxable year.
Computation of Petitioner's Deficiency for 1981 and 1984
Respondent treated the tentative refunds paid to Acme as
rebates to petitioner and the group in the computation of the
group's deficiencies for 1981 and 1984.
The parties stipulated that if the tentative refunds
constitute "rebates" to petitioner and the group, then, without
taking into account certain unapplied payments made by
petitioner,5 petitioner and the group are liable for deficiencies
for 1981 and 1984 in the amounts of $1,709,109 and $2,090,177,
4 Acme has agreed to extend the statutory period for
assessment applicable to it and its consolidated subsidiary's 27-
week short taxable year ended Dec. 28, 1986.
5 Unapplied payments were made by petitioner on Aug. 31, 1992,
in the amounts of $616,285.76, $2,509.14, and $3,925,935.52 for
taxable years 1980, 1982, and 1983, respectively.
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