- 23 -
31, 1988. Charles Schwab Corp. & Includable Subs. v.
Commissioner, supra at 297; Epoch Food Serv., Inc. v.
Commissioner, 72 T.C. 1051, 1053 (1979). Accordingly, the Court
in Schwab I found that the 1988 California franchise tax was
assessed and accruable on December 31, 1988, on the basis of
California law before the 1972 amendments. Because of that
holding, there was no need for the Court to decide whether
section 461(d) and the underlying regulations proscribed any
acceleration caused by the 1972 amendments.12
Petitioner argues that section 461(d) was not intended to
result in circumstances in which a taxpayer is not entitled to
deduct any State tax in a particular year. More particularly,
petitioner contends that the sole intent for enactment of section
461(d) was to prohibit acceleration of the accrual attributable
to post-1960 State legislation that results in double deductions.
On the other hand, respondent argues that section 461(d) and the
regulations are unambiguous and a literal reading would result in
no accrual or deduction of California franchise tax in
petitioner’s 1989 year because it was deducted for petitioner’s
short year ended December 31, 1988, and no additional deduction
12 Because of this Court’s holding in Schwab I, petitioner
received two California franchise tax deductions in connection
with the 1988 calendar year: One for its year ended Mar. 31,
1988 (computed on the basis of the 1987 California “income
year”), and one for its short year ended Dec. 31, 1988 (computed
on the basis of the 1988 California “income year”).
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011