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Respondent contends that section 461(d) permits a deduction
only for the amount of tax not accelerated by post-1960 changes
in State law. Respondent quotes the following portion of section
461(d) with key phrases highlighted:
“to the extent that the time for accruing
taxes is earlier than it would be but for any
action of any taxing jurisdiction taken after
December 31, 1960, then, under regulations
prescribed by the Secretary, such taxes shall
be treated as accruing at the time they would
have accrued but for such action by such
taxing jurisdiction.”
Respondent, therefore, argues that petitioner would be able
to deduct $932,979 for 1989. Respondent also points out that the
$873,609 difference between the $932,979 allowed for 1989 and the
$1,806,588 that accrued for petitioner’s 1989 year under the 1972
law would be allowable for Federal tax purposes in petitioner’s
1990 year.8
Petitioner is willing to accept respondent’s concession that
it is entitled to the $932,979 deduction for its 1989 Federal tax
year. Petitioner, however, contends that section 461(d) cannot
be partially applied. This position has been part of
petitioner’s argument from the beginning. Petitioner’s partial
application argument is an attempt to focus the Court on
petitioner’s original position that the 1972 law merely changed
8 Under the pre-1972 California franchise tax law,
petitioner’s 1990 franchise tax obligation/deduction would have
been based on petitioner’s 1989 California income.
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Last modified: May 25, 2011