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1990 and 1991 consolidated corporate Federal income tax returns,
petitioner claimed NOL carrybacks, and on its 1993 and 1994
consolidated corporate Federal income tax returns petitioner
claimed NOL carryforwards relating to the $3,751,930 bad debt
deduction claimed on the 1992 consolidated corporate Federal
income tax return.
Also, on the 1992 consolidated corporate Federal income tax
return, relying on the insolvency exception of
section 108(a)(1)(B) and Peoplefeeders’ alleged insolvency,
Peoplefeeders did not recognize any income relating to the
cancellation of the purported $3,751,930 debt obligation to
Square Pan. Further, on the 1992 consolidated corporate Federal
income tax return, Peoplefeeders took the position that, under
section 108(b), no reduction in any tax attributes (specifically
no reduction in the amount of the NOL that was claimed on the tax
return relating to the claimed $3,751,930 bad debt deduction) was
required on petitioner's tax return because the claimed bad debt
deduction and the related NOL did not “belong to” Peoplefeeders
(i.e., on the ground that the claimed bad debt deduction and the
related NOL constituted tax attributes not of Peoplefeeders, but
only of Square Pan).
3(...continued)
deductions claimed prior to July 12, 1995, and was removed for
later years by amendments to the regulations as reflected in T.D.
8597, 1995-2 C.B. 147.
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