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the issue for decision is whether petitioner’s deduction for
expenses incurred in providing employees with nonbusiness flights
on a company-owned airplane is limited by section 2742 to the
amount reported as imputed income to the recipient employees.
Background
The parties submitted this case fully stipulated. The
stipulation of facts and the attached exhibits are incorporated
herein by this reference. Petitioner is a corporation that had
its principal place of business in Anchorage, Alaska, at the time
it filed its petition. At all relevant times, petitioner had a
fiscal and taxable year ending December 31 and used the accrual
method of accounting for both financial reporting and tax
purposes.
For the year in issue, petitioner was the parent corporation
of an affiliated group of corporations that provided banking and
other financial services and filed consolidated Federal income
tax returns. NB Aviation, Inc. (Aviation) was a wholly owned
subsidiary of petitioner and was a member of petitioner’s
consolidated group.3
Aviation owned a 1974 Gulfstream G-11B jet aircraft (the
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
3Petitioner and Aviation are collectively referred to as
“NBA”.
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Last modified: May 25, 2011