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petitioner’s 1993 Schedule C.
In the fall of 1996, respondent began an examination of
petitioner’s taxable years ended June 30, 1990, 1991, 1992, and
1993. On October 8, 1996, petitioner mailed to respondent a
letter on petitioner’s letterhead, entitled “STATEMENT FURNISHED
UNDER REVENUE PROCEDURE 94-69", which respondent received on
October 11, 1996 (October 11, 1996 disclosure letter). Price
Waterhouse had drafted that letter. The October 11, 1996 disclo-
sure letter stated in pertinent part:
As previously disclosed to the Internal Revenue Service
(IRS) in July 1995, and on September 24, 1996,
InterTAN, Inc. [petitioner] is facing under Internal
Revenue Code Section 905(c) a potential redetermination
of the foreign tax credits claimed on its U.S. income
tax returns for the years ended June 30, 1990 through
June 30, 1993. The redetermination could arise from a
potential deficit in the post-1986 pool of foreign
taxes for InterTAN Canada Ltd. (InterTAN Canada) [ITC].
In this eventuality, InterTAN, Inc.’s foreign tax
credits would be required to be redetermined pursuant
to Treasury Regulation Section 1.905-3T(d)(4)(iv) with
notification made by InterTAN Inc. pursuant to Treasury
Regulation Section 1.905-4T(b).
The dividends paid by InterTAN Canada from the 1988
through 1992 tax years are as follows:
Deemed-paid
Tax Type of Foreign Tax Grossed-up
Year Dividend Amount Credit Dividend
1988 Preferred $23,910,500 $15,720,834 $39,631,334
Stock
Redemption
1989 Preferred 13,570,739 8,745,782 22,316,521
Stock
Redemption
1992 Preferred 20,000,000 18,236,696 38,236,696
Stock
Redemption
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