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substantial portion of the specified liability losses that
petitioner claimed in its 1992 tax return. Petitioner
subsequently conceded a portion of the disallowed specified
liability losses, leaving for decision the status of
$1,019,205.23 in purported specified liability losses incurred by
Lynchburg during 1992.
The specified liability losses remaining in dispute consist
of the following items:
Disallowed Specified Liability Losses Amount
State tax deficiencies $717,617.00
Interest on State tax deficiencies 299,412.63
Interest on Federal income tax deficiency 2,175.60
The State of Michigan imposes a Single Business Tax on every
person with business income in the State. Mich. Comp. Laws Ann.
�208.1 to 208.23b (West 1986). During 1992, Lynchburg paid the
aforementioned State taxes and interest to the State of Michigan
following an audit of its 1986, 1987, and 1988 Michigan Single
Business Tax returns. During 1992, Lynchburg paid the
aforementioned interest to the Internal Revenue Service (the IRS)
following an audit of petitioner’s consolidated Federal income
tax return for 1987 and in accordance with an agreed adjustment
to Lynchburg’s separate taxable income for that year. In 1992,
Lynchburg properly deducted the additional State taxes and
Federal and State interest described above under chapter 1 of the
Internal Revenue Code.
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