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discontinued operations, attributable to G�nther, of $13,496,553
before income taxes. After reducing the loss for an income tax
benefit of $4,229,613, petitioner reported a net loss
attributable to G�nther of $9,266,940. On its consolidated
balance sheet for FYE May 31, 1992, petitioner reported a net
liability from discontinued operations attributable to G�nther of
$10,502,000, consisting of a projected loss during the phaseout
period of $3,883,000 and a projected loss on the final sale of
G�nther’s assets of $6,619,000.
F. The Intercompany Account
Flint and its subsidiaries used an intercompany account to
record various charges and credits among the different companies.
Intercompany account balances were recorded in the books and
records of the companies as accounts receivable/payable and
accrued interest at a market rate.
G�nther’s intercompany account balance during the years at
issue consisted of the following components: (a) Corporate
charges; (b) interest charges; (c) allocations of expenses
incurred on a group basis for Flint and its subsidiaries; e.g.,
insurance; (d) intercompany purchases; and (e) cash advances;
i.e., cash paid directly to banks or advanced to G�nther for that
purpose and cash advanced to G�nther for the purpose of meeting
other short-term financial obligations, such as payroll. The
following table shows G�nther’s intercompany account balances for
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