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section 1341 for its reduction in utility rates from 1987 through
1990 to compensate for excess deferred Federal income tax.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner, a public utility, is a subsidiary of MidAmerican
Energy Holding Company and is the successor in interest to
Midwest Resources, Inc. (Midwest Resources), a corporation formed
under the laws of Iowa. At the time the petitions in these cases
were filed, petitioner’s principal place of business was in
Des Moines, Iowa. Predecessors in interest of Midwest Resources
whose Federal income tax returns are in issue in these cases
include Iowa Resources, Inc., and Midwest Energy Company. Any
reference to petitioner herein includes its predecessors.
Petitioner engages in the retail distribution of natural gas
(gas), electricity, and related services to residential,
commercial, and industrial customers in Minnesota, Iowa,
Nebraska, and South Dakota. In the ordinary course of business,
petitioner purchases gas and either resells it to its customers
or consumes it to generate electricity for its customers. During
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