Metro Leasing and Development Corporation, East Bay Chevrolet Company, a Corporation - Page 1

                                           119 T.C. No. 2                                               

                                     UNITED STATES TAX COURT                                            

                    METRO LEASING AND DEVELOPMENT CORPORATION, EAST BAY                                 
                       CHEVROLET COMPANY, A CORPORATION, Petitioner v.                                  
                        COMMISSIONER OF INTERNAL REVENUE, Respondent*                                   

                  Docket Nos. 8054-99.            Filed July 17, 2002.                                  

                        In an earlier opinion, we decided that P permitted                              
                  its 1995 earnings to accumulate beyond the reasonable                                 
                  needs of its business.  Secs. 531-537, I.R.C.  There                                  
                  remains, however, a dispute concerning the computation                                
                  of the accumulated earnings tax.  P contends,                                         
                  alternatively, that R failed to reduce P’s accumulated                                
                  earnings tax base by the following amounts: (1)                                       
                  “Deferred” tax attributable to installment sale                                       
                  proceeds to be received by P in tax years after 1995;                                 
                  (2) the amount of the income tax deficiency determined                                
                  by respondent which remains contested by P and for                                    
                  which P has made payment after filing its petition; and                               
                  (3) the difference between the amount of tax liability                                
                  reported on P’s return and the amount of tax that would                               
                  have been due on P’s net capital gain.                                                

                  *This Opinion supplements a previously released opinion:                              
            Metro Leasing & Dev. Corp., East Bay Chevrolet Co., A Corporation                           
            v. Commissioner, T.C. Memo. 2001-119.                                                       

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