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conclusion that petitioner was the continuing common parent of
the affiliated group was that Interlake’s postspinoff losses were
subject to the separate return limitations (SRLY) rules of
section 1.1502-21(c), Income Tax Regs., which, among other
things, provide limits on net operating loss carrybacks. See
Sec. 1.1502-21(c)(2), Income Tax Regs.
Notice of Deficiency and Stipulation of Settled Issues
On March 15, 1994, respondent issued petitioner a notice of
deficiency reflecting the positions taken in the PLR’s.
Respondent determined that petitioner was the continuing common
parent of the affiliated group and revised petitioner’s income on
the basis of a 52-week 1986 tax year rather than a 27-week tax
year as reported on petitioner’s 1986 return. Respondent
disallowed the carrybacks to 1981 and 1984, determining that
petitioner did not sustain a CNOL in 1986 as claimed by
petitioner in its applications for tentative carryback
adjustments. The 1986 CNOL was disallowed in full.
In addition to 1981 and 1984, the notice of deficiency
included deficiencies for 1974 through 1978, 1980, and 1983.
Respondent disallowed consolidated investment credit carrybacks
from 1978 to 1975 and 1974. Respondent disallowed a consolidated
investment credit carryback from 1979 to 1976, a consolidated
foreign tax credit carryback from 1979 to 1977, a consolidated
foreign tax credit carryback from 1980 to 1978, a consolidated
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