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was not entitled to any California franchise tax deduction for
1989. Conversely, petitioner claimed that it was entitled to
$1,806,588 (more than the amount it had claimed on its 1989
return). We resolved that controversy, as framed, by holding
that section 461(d) applied and that petitioner was not entitled
to any franchise tax deduction for 1989.
After we issued our Opinion in Schwab II, respondent, in his
motion for reconsideration, conceded that petitioner is entitled
to a $932,979 franchise tax deduction for 1989. The concession
is based on respondent’s current view that under the pre-1972
California franchise tax statute, petitioner would have been
obligated for $932,979 of franchise tax for 1989 even though the
Court in Schwab I had decided that the same amount was allowable
for petitioner’s short year ended December 31, 1988.
Because the Court in Schwab I allowed petitioner a $932,979
deduction for its short year ended December 31, 1988,
respondent’s concession of the $932,979 for 1989 appears
incongruent. The perceived discrepancy is rooted in the fact
that petitioner did not claim a franchise tax deduction for its
short year ended December 31, 1988, and the allowance of that
amount by the Court in Schwab I would seem to preempt a deduction
for the following period. In reality, however, petitioner’s
obligation for 1989 California franchise tax accrued and was paid
under the 1972 law. Petitioner’s actual California franchise tax
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