Northern Telecom Inc. & Subsidiaries - Page 2




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                         Year                  Deficiency                             
                         1981           $ 12,593,692                                  
                         1982                51,639,634                               
                         1983                82,327,873                               
                         1984                153,418,047                              
                         1985                223,328,166                              
               After concessions, the issue for decision is whether                   
          petitioner sold property to its wholly owned subsidiary in                  
          intercompany transactions pursuant to section 1.1502-13, Income             
          Tax Regs., where the subsidiary received its rights to acquire              
          the property by assignment from third parties who were not                  
          members of petitioner’s consolidated group.  This issue is before           
          the Court on cross-motions for partial summary judgment pursuant            
          to Rule 121.  The record shows, and the parties agree, that there           
          is no genuine issue of material fact.  Unless otherwise                     
          indicated, all section references are to the Internal Revenue               
          Code in effect for the years in issue, and all Rule references              
          are to the Tax Court Rules of Practice and Procedure.                       
                                     Background                                       
               Northern Telecom Inc. (petitioner) is the common parent of             
          an affiliated group of corporations, which, at the time of the              
          filing of the petition, had a principal place of business in                
          Nashville, Tennessee.  Petitioner is a corporation organized and            
          existing under the laws of the State of Delaware.  Petitioner and           
          its subsidiaries filed consolidated Federal income tax returns              
          during all of the years in issue.                                           





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