Unionbancal Corporation - Page 6

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          which represented 20 percent of the loss claimed on petitioner’s            
          original 1984 return.  Remaining losses associated with the sale            
          of the loan portfolio were deferred pursuant to section 267(f).3            
          Tax Treatment of the Loan Portfolio Deferred Loss for Taxable               
          Year 1988                                                                   
               On its Federal income tax return for taxable year 1988,                
          petitioner originally claimed no deduction for any loss resulting           
          from the sale of the loan portfolio in 1984.  Instead, as                   
          previously discussed, petitioner initially sought to deduct such            
          losses with respect to its 1984 taxable year.  The settlement of            
          its 1984 taxable year having resulted in an allowance for that              
          year of only $2,314,379 of the losses, petitioner sought an                 
          affirmative adjustment for its 1988 taxable year, claiming that             
          losses deferred from the 1984 loan portfolio sale should be                 
          restored to petitioner on October 31, 1988, when it left the                
          Standard Chartered controlled group.  Respondent disallowed                 
          petitioner’s claim.                                                         
         The Competent Authority Process                                              
              For United Kingdom income tax purposes, Standard Chartered-             
         U.K. claimed losses with respect to the loan portfolio predicated            

               3  The appeals settlement left unresolved the value of the             
          loan portfolio at the time of its sale to Standard Chartered-U.K.           
          Accordingly, the amount of any loss deferred under sec. 267 was             
          not determined as part of the settlement agreement.                         

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