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Under paragraph 11 of the agreement, petitioner agrees that
if the IRS should determine that petitioner was the continuing
common parent, it would grant Interlake an unqualified power of
attorney to represent petitioner in connection with all matters
involving Federal income tax for the years ending before the
effective date.
Tax Filings by Interlake and Petitioner
On August 7, 1987, Interlake filed Form 1120, Consolidated
U.S. Corporation Income Tax Return, for a 52/53-week 1986 tax
year ended December 28, 1986. Interlake’s 1986 return reported a
$8,461,369 consolidated net operating loss (CNOL) and $1,496,693
of excess consolidated general business credits.
On August 11, 1987, Interlake filed Form 1139, Corporation
Application for Tentative Refund, with respect to the 1986 tax
year. The application requested a tentative carryback adjustment
of $5,346,097, attributable to the carryback of the 1986 CNOL and
excess consolidated business credits to the group’s 1984 tax
year. On September 14, 1987, not much more than 1 month later,
respondent paid a $5,346,097 tentative refund to Interlake.
On August 28, 1987, petitioner and its wholly owned
subsidiary, AMC, filed a consolidated U.S. Corporation Income Tax
Return for a 27-week 1986 short tax year, which commenced with
the date of the spinoff, June 23, 1986, and ended December 28,
1986. Petitioner’s 1986 return reported a $29,286,968 CNOL, all
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