Square D Company and Subsidiaries - Page 3




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          certain interest owed to related foreign persons during the                 
          taxable years in which the interest was accrued but not paid.1              
               Unless otherwise noted, all section references are to the              
          Internal Revenue Code in effect for taxable years 1991 and 1992,            
          and all Rule references are to the Tax Court Rules of Practice              
          and Procedure.                                                              
          Factual Background                                                          
               The facts have been stipulated by the parties and are so               
          found.  We incorporate by this reference the stipulation of                 
          facts, the first supplemental stipulation of facts, and                     
          accompanying exhibits.  The following summary of the facts is               
          based on the stipulations.                                                  
               Square D Company, a Delaware corporation with its principal            
          executive offices in Palatine, Illinois, is the common parent of            
          an affiliated group of corporations making a consolidated return            
          (collectively, petitioner).  Petitioner computes consolidated               
          taxable income on the basis of a calendar year.                             
               Prior to its acquisition by Schneider S.A. (discussed                  
          below), petitioner was a publicly held company whose stock was              
          traded on the New York Stock Exchange.  During the years in issue           
          petitioner was engaged in the United States and abroad in the               
          manufacture and sale of electrical distribution and industrial              


               1 Other issues raised in the instant case are considered in            
          a separate opinion.                                                         





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