Flint Industries, Inc. and Subsidiaries - Page 3




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          stock were worthless in the taxable years the disputed deductions           
          were claimed.3  Respondent concedes, however, that all of the               
          disallowed worthless stock and bad debt deductions constitute a             
          long-term capital loss for FYE May 31, 1994.                                
                                  FINDINGS OF FACT                                    
               Some of the facts, and pertinent German law, have been                 
          stipulated for purposes of these proceedings and are so found or            
          stated.  The stipulations are incorporated herein by this                   
          reference.                                                                  
          I.  In General                                                              
               At the time the petition was filed, Flint Industries, Inc.             
          (Flint), was a corporation with its principal place of business             
          in Tulsa, Oklahoma.  For all relevant years, Flint was the common           
          parent of a group of affiliated corporations that filed a                   
          consolidated corporate income tax return for each of the taxable            
          years at issue.4  For all relevant years, Flint used the accrual            
          method of accounting and a fiscal year ended May 31.                        


               3As a result of respondent’s determination that petitioner             
          was not entitled to the claimed bad debt deductions, respondent             
          made a corollary adjustment to petitioner’s interest income.                
          Respondent agrees that this adjustment will be resolved                     
          consistent with our resolution of the bad debt issue.  Petitioner           
          also alleges error in the computation of the deficiencies.  The             
          parties agree that the computational matters will be addressed in           
          the Rule 155 computation.                                                   
               4In its reply brief, petitioner states that only Flint and             
          its domestic subsidiaries filed consolidated returns for the                
          years at issue; G�nther, a foreign subsidiary, was not eligible             
          to be included, and was not included, in the consolidated group.            





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