Dover Corporation and Subsidiaries - Page 3

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               Unless otherwise stated, all section references are to the             
          Internal Revenue Code in effect for 1997, the year at issue, and            
          all Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  
                                     Background                                       
          Introduction                                                                
               This case was submitted for decision without trial pursuant            
          to Rule 122.  Facts stipulated by the parties are so found.  The            
          stipulation of facts filed by the parties, with attached                    
          exhibits, is included herein by this reference.  Respondent                 
          objects, on the grounds of relevance, to 26 exhibits referenced             
          in certain of the stipulations.  See the discussion infra section           
          IV.                                                                         
               Petitioner is a Delaware corporation, whose shares are                 
          publicly traded and which maintains its principal place of                  
          business in New York, New York.                                             
          Business Activities of the Affiliated Group                                 
               Together, the affiliated group is a diversified industrial             
          manufacturer, producing through its members and foreign                     
          subsidiaries a broad range of products and sophisticated                    
          manufacturing equipment for other industries and businesses.                
          During and prior to 1997, the group’s business activities were              
          divided into five business groups, one of which was known as                
          Dover Elevator.                                                             






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