- 6 -
FPL usually held its short-term investments in commercial paper
with rates of return averaging 3.25 percent.
C. FPL’s 1991 Capital Loss (Sale of CPG)
On its consolidated income tax return for 1991, FPL reported
a capital loss of $581,921,987 attributable to its sale of CPG.
FPL carried back approximately $131 million of the CPG loss to
taxable years prior to 1991. On its consolidated income tax return
for 1992, FPL claimed a loss carryover of approximately $311
million attributable to its CPG loss.
Respondent issued a notice of deficiency to FPL for, among
other years, 1991 and 1992. Respondent determined, in pertinent
part, that FPL had understated the amount of its CPG loss subject
to disallowance pursuant to section 1.1502-20, Income Tax Regs.3
FPL filed a petition for redetermination with the Court (docket No.
5271-96) contesting respondent’s determination regarding the
correct amount of its CPG loss and challenging the validity of
section 1.1502-20, Income Tax Regs.
II. The Partnership Proposal
A. Goldman Sachs & Co./STAMPS
FPL was a client of Goldman Sachs & Co. (Goldman Sachs), a
large investment bank. Goldman Sachs had advised FPL with regard
3 Sec. 1.1502-20(a), Income Tax Regs., states the general
rule that no deduction is allowed for any loss recognized by a
member of the affiliated group with respect to the disposition of
stock of a subsidiary.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011