The Charles Schwab Corporation and Subsidiaries - Page 2

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               in an earlier case and Opinion of this Court, Charles                  
               Schwab Corp. & Includable Subs. v. Commissioner, 107                   
               T.C. 282 (1996), it had been decided that P was                        
               entitled to a $932,979 deduction for its 1988 short year.              
                    R, after we held in Schwab II that sec. 461(d),                   
               I.R.C., applied and that P was not entitled to a                       
               $932,979 deduction for 1989, moved for reconsideration.                
               R has changed his position and now concedes that P is                  
               entitled to a $932,979 Cal. franchise tax deduction for                
               its 1989 Federal tax year.  P would accept R’s                         
               concession but continues to argue that it is entitled                  
               to a $1,806,588 deduction.                                             
                    Held:  The effect of sec. 461(d), I.R.C., analyzed                
               and in the factual context of this case, P is entitled                 
               to a $932,979 Cal. franchise tax deduction.                            


               Glenn A. Smith, Erin M. Collins, Laurence J. Bardoff, and              
          Patricia J. Galvin, for petitioner.                                         
               Rebecca T. Hill, for respondent.                                       


                                SUPPLEMENTAL OPINION                                  

               GERBER, Chief Judge:  In an earlier Opinion in these cases,1           
          two primary issues were decided.  Respondent moved for                      
          reconsideration concerning our holding on the California                    
          franchise tax issue.2  Respondent seeks reconsideration                     

               1 Charles Schwab Corp. & Subs. v. Commissioner, 122 T.C. 191           
          (2004) (Schwab II).  In Schwab II we referenced a 1996 Opinion              
          concerning petitioner:  Charles Schwab Corp. & Includable Subs.             
          v. Commissioner, 107 T.C. 282 (1996) (Schwab I).  The Findings of           
          Fact in Schwab II are incorporated herein by this reference.                
               2 In Schwab II we held that sec. 461(d), I.R.C., limited               
          petitioner’s deduction for California franchise tax to an amount            
          accrued and computed under California’s pre-1972 franchise tax              
                                                             (continued...)           





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