Central Pa. Sav. Ass'n v. Commissioner
United States Tax Court
During the taxable years at issue, P deducted additions to its bad debt reserve utilizing the percentage of taxable income method set forth in sec. 593(b)(2)(A), I.R.C.
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During the taxable years at issue, P deducted additions to its bad debt reserve utilizing the percentage of taxable income method set forth in sec. 593(b)(2)(A), I.R.C. In its calculations of taxable income for this purpose, P did not take into account net operating losses (NOL's) as provided in sec. 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs.Held: Upon reconsideration, we no longer adhere to our prior holdings that such regulation is invalid; P must take NOL's into account in computing its taxable income under sec. 593(b)(2)(A), I.R.C., as required by such regulation. Georgia Federal Bank…
1Opinion of the Court
OPINION
Tannenwald, Judge:1
This case is before us on petitioner’s motion and respondent’s cross-motion for summary judgment. Rule 121.2 The sole issue is whether section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., is valid to the extent that it requires petitioner, in using the “percentage of taxable income method” to calculate additions to its bad debt reserve under section 593(b)(2)(A), to reflect the carryback of petitioner’s net operating loss (nol) from 1980 and later years in the computation of taxable income for the years at issue. The issue is not new to this Court. See infra pp.…
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