- 2 -
All three reductions proposed by P require our
interpretation of sec. 535(b), I.R.C. Proposed
reductions (1) and (2) involve the interpretation of
sec. 535(b)(1), I.R.C., and sec. 1.535-2(a)(1), Income
Tax Regs. Reduction (3) involves sec. 535(b)(6),
I.R.C. Reductions (1) and (3) present questions of
first impression. With respect to reduction (2), this
Court’s decision on the issue was reversed by the Court
of Appeals for the Fifth Circuit in J.H. Rutter Rex
Manufacturing Co. v. Commissioner, 853 F.2d 1275 (5th
Cir. 1987), revg. on this point T.C. Memo. 1987-296.
If we follow the holding of the Court of Appeals, P
would be entitled to a reduction for the paid, but
still contested, income tax deficiency. R urges this
Court not to follow the holding of the Court of
Appeals.
Held: This Court will not follow the holding of
Court of Appeals on this point in Rutter Rex. Held,
further, sec. 535(b), I.R.C., and underlying
regulations are interpreted, and R’s computation of P’s
accumulated earnings tax liability is correct.
William L. Raby, for petitioner.
Kathryn K. Vetter, for respondent.
SUPPLEMENTAL OPINION1
GERBER, Judge: In an earlier opinion, we decided that
petitioner permitted its 1995 earnings to accumulate beyond the
1 On May 18, 2001, this Court filed a Memorandum Findings Of
Fact And Opinion, Metro Leasing & Dev. Corp., East Bay Chevrolet
Co., A Corporation v. Commissioner, T.C. Memo. 2001-119, in two
consolidated cases (docket Nos. 8054-99 and 8055-99) stating that
decisions would be entered pursuant to Rule 155 of the Court’s
Rules of Practice and Procedure in both docket numbers. On Sept.
20, 2001, in docket No. 8055-99, Respondent’s Computation For
Entry Of Decision (together with a proposed decision document)
was filed. On Oct. 3, 2001, by order of this Court, the
consolidated cases at docket No. 8054-99 and docket No. 8055-99
were severed. On Oct. 5, 2001, a decision was entered in docket
No. 8055-99.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011