The Charles Schwab Corporation and Subsidiaries - Page 6

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               In Charles Schwab Corp. & Includable Subs. v. Commissioner,            
          107 T.C. 282 (1996) (Schwab I), affd. on another issue 161 F.3d             
          1231 (9th Cir. 1998), cert. denied 528 U.S. 822 (1999),                     
          petitioner claimed that the $932,979 originally deducted on its             
          1989 calendar year return was deductible for its short year ended           
          December 31, 1988.  This Court held that petitioner was entitled            
          to deduct the $932,979 for its short year ended December 31,                
          1988.  Id.  That holding left petitioner unable to deduct the               
          $932,979 for its calendar year 1989, as it had on its original              
          1989 corporate return.  For purposes of this Federal tax                    
          litigation, petitioner now claims to be entitled to deduct                  
          California franchise tax liabilities for the same taxable period            
          for which the franchise tax was calculated; i.e., the year prior            
          to the year for which petitioner originally deducted the                    
          California franchise tax on its Federal tax returns.  The                   
          following schedule reflects the years and amounts for which                 
          petitioner originally claimed California franchise tax                      
          deductions, and the years and amounts for which petitioner claims           
          deductions for purposes of this litigation:                                 
                                            Amounts                                   
          Taxable Year             Originally Claimed      Now Claimed                
          1989                          $932,979          $1,806,588                  
          1990                          1,806,588           2,066,547                 
          1991                          2,066,547           3,778,547                 
          1992                          3,778,547           5,578,718                 
          1993                          5,578,718           N/A                       







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