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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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