Chrysler Corporation - Page 4

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               On its original 1980 return, petitioner included $17,945,227           
          of section 78 gross-up income and claimed a deduction in the same           
          amount.  Petitioner also deducted $16,610,858 as direct foreign             
          taxes paid, for a total deduction of $34,556,085.  The 1980                 
          amended return eliminated the foreign tax deduction, claiming in            
          its place creditable foreign taxes (in the amount of the original           
          deduction) resulting from direct and deemed paid taxes.  The 1980           
          amended return also claimed an additional $8,686,479 of deemed              
          paid taxes, for total creditable foreign taxes of $43,242,564.              
          The 1980 amended return reported total section 78 gross-up income           
          of $26,631,706, an increase of $8,686,479 over the $17,945,227              
          reported on the original 1980 return.                                       
               On its 1980 through 1982 amended returns, petitioner                   
          reported that the election of the foreign tax credit generated              
          increased taxable income from the disallowance of the deduction             
          for foreign taxes and increased section 78 gross-up income.                 
          Those amended returns reported net operating losses (NOL’s) and             
          no U.S. tax liability against which to credit foreign taxes;                
          accordingly, petitioner applied no foreign tax credits on those             
          amended returns.  Petitioner had no taxable income or U.S. tax              
          liability for 1978 and 1979 against which a foreign tax credit              
          from 1980 or 1981 could have been applied by way of a carryback.            
               Pursuant to petitioner’s 1985 amended return, the creditable           
          foreign taxes reported on the 1980 through 1982 amended returns             

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