Garber Industries Holding Co., Inc. - Page 1

                                   124 T.C. No. 1                                     

                               UNITED STATES TAX COURT                                

                 GARBER INDUSTRIES HOLDING CO., INC., Petitioner v.                   
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 10871-01.            Filed January 25, 2005.                

               P, a closely held corporation, is the parent of an                     
               affiliated group that files consolidated Federal income                
               tax returns.  In April 1998, A sold all of his P shares                
               to his brother, B.  As a result of that sale, B’s                      
               percentage ownership of P increased by more than 50                    
               percentage points.                                                     
                    On its consolidated income tax return for 1998, P                 
               claimed a net operating loss (NOL) deduction of                        
               $808,935 for regular tax purposes and $735,783 for                     
               alternative minimum tax (AMT) purposes.  R determined                  
               that the 1998 transaction between A and B resulted in                  
               an ownership change with respect to P within the                       
               meaning of sec. 382(g), I.R.C.  In accordance with sec.                
               382(b), I.R.C., R reduced P’s 1998 NOL deduction, for                  
               both regular tax and AMT purposes, to $121,258.                        

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