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D. Petitioner's Use of the Tri-Power NOL's
Following the December 1, 1986, dropdown, petitioners
applied Tri-Power's NOL's against the income of the dropdown
properties. For the years 1986 through 1990, petitioners
reported taxable income, before taking into consideration any NOL
deductions, and NOL deductions as follows:
Year Taxable Income NOL Deductions
1986 $2,015,639 $457,733
1987 4,144,056 4,144,056
1988 8,399,084 8,399,084
1989 10,770,299 10,770,299
1990 12,640,852 12,640,852
During the years in issue, petitioners deducted over $18 million
of the Tri-Power NOL's. Petitioner, as a result of the NOL
28(...continued)
Year Reserves Acquisition
Acquired Name Location Acquired Price
1990 Devon Oil Meeteetse/Wyoming Unknown 436,417
McAdams, Roux & Wyoming Oil & Gas 7,100,000
Associates
Morgan Energy West Texas Gas 2,500,000
Partners
Murphy Oil New Mexico Oil 2,250,000
Permian Minerals/ West Texas Oil & Gas 9,200,000
Michael Cass
1991 Arch Petroleum West Texas Gas $17,300,000
Michael Cass West Texas Oil 1,500,000
1992 ARCO Wyoming Gas 10,000,000
Phillips Petroleum Wyoming Unknown 635,000
1993 Miscellaneous Various locations Oil & Gas 1,600,000
1994 Anadarko Petroleum Utah, Wyoming Oil & Gas 24,300,000
Ensign Oil & Gas Wyoming Gas 1,850,000
Raydon Exploration Oklahoma Gas 1,825,000
105,390,535
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