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Appeals affirmed this Court’s holding that petitioner had to
recognize capital gains on the sale of the Carnation assets but
reversed and remanded the Court’s 1995 opinion with regard to the
valuation of the Carnation assets.
Remand to the Tax Court and 1999 Stipulation
After the Court scheduled the case for a new trial, the
parties reached a basis of settlement in 1999 as to the value of
the Carnation assets (1999 stipulation). The valuation dispute
affected only the deficiency and overpayment determinations for
the 1985 tax year.10 As part of the 1999 stipulation, the
parties described the deficiency and/or overpayment computation
for the 1985 tax year in their Rule 155 computations. The
parties agreed to the following:
1. * * * The parties hereby stipulate that
Carnation Company’s basis in the trademarks was
$239,500,000 and that the capital gain upon the sale of
these trademarks to NSA shall be computed by reference
to the foregoing basis * * *.
2. The parties’ stipulation in paragraph 1 of
Petitioner’s basis in the trademarks is for the sole
purpose of resolving the remaining disputed issue in
this case and has no precedential value beyond
determining Carnation Company’s basis in the trademarks
and goodwill/going concern value.
9(...continued)
petitioner’s 1983 and 1984 tax accounts, respectively. Those
funds came from interest overpaid by petitioner for the years in
issue.
10 The valuation of the Carnation assets affected the
amount of capital gains petitioner had to recognize for the 1985
tax year.
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