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the statutory notice, and petitioner raised a new issue in its
petition. Seven issues were settled by the parties before trial,
and one (the research credit issue) has been deferred for later
trial or other disposition. Two issues were settled after trial.
The issue addressed in this opinion is whether petitioner may
depreciate, upon application of the rule of Cohan v.
Commissioner, 39 F.2d 540 (2d Cir. 1930), approximately
$2 million in expenditures for which complete and correct records
were not maintained. Unless otherwise indicated, all section
references are to the Internal Revenue Code in effect for the
years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
FINDINGS OF FACT
Petitioner is a Delaware corporation with its principal
offices located in Springdale, Arkansas. During the years in
issue, petitioner was the world’s largest fully integrated
producer, processor, and marketer of poultry-based food products.
By the end of 1991, Culinary Foods, Inc. (Culinary), based
in Chicago, Illinois, was a well-established manufacturer of
frozen food products for institutional buyers, as well as other
food products for the airline industry. At that time, Culinary
operated through two integrated manufacturing facilities located
on the north side of Chicago.
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