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ended December 31, 1988. In that return, petitioner did not
claim a deduction for California franchise tax. Under the pre-
1972 California franchise tax law, the tax for the first short
year (1987 in this case) was in the nature of an advance payment
on the franchise tax for the first full year. The computation of
the first full year’s tax was also an exception to the general
pre-1972 franchise tax law and accrued on December 31 of the
reporting year (1988). Petitioner’s 1988 obligation for
franchise tax under the 1972 law was $932,979, the same amount as
under the pre-1972 law. Petitioner, under the 1972 law, was
obligated for and paid $932,979 in California franchise tax for
1988.
For petitioner’s 1989 and later years, the pre-1972
franchise tax was measured by the California income of the prior
year and accrued on January 1 of the reporting year. The 1972
law changed the accrual date from January 1 of the reporting year
to December 31 of the prior year, thereby accelerating the
accrual date. Under the 1972 law, the reporting and measuring
year coincided so that the franchise tax obligation was based on
the current year’s income. Accordingly, for petitioner’s 1989
and later years the amount of tax computed under the pre-1972 law
differed from the amount computed under the 1972 law. Because
petitioner’s income was increasing during the years under
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