BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
: STIPULATION
OF FACTS
Petitioner, :
v. :
AUDITING
DIVISION, UTAH STATE : Appeal No. 88-0741
TAX COMMISSION, :
Respondent. :
_____________________________________
Petitioner
and Respondent hereby stipulate as follows:
XXXXX/XXXXX
1.
Prior to XXXXX, XXXXX, XXXXX, and XXXXX (hereafter "the brothers~)
cumulatively owned the majority of the stock of XXXXX operating corporations.
2. A stock holding and management corporation,
XXXXX, (hereafter "XXXXX") was formed on XXXXX, to consolidate the
corporations into a manageable structure.
3. At XXXXX, the stock of XXXXX was entirely
owned by the brothers or members of their families, with any differences in the
percentage of ownership due to pending settlement of divorces.
4. On XXXXX, XXXXX underwent a statutory merger
with XXXXX and XXXXX changed its name to XXXXX (hereafter "XXXXX").
5. On XXXXX, shares of XXXXX stock were
transferred between the brothers to give each brother and equal percentage of
ownership after the settlement of divorces.
XXXXX
6. Prior to XXXXX, the stock of XXXXX (hereafter
"XXXXX") was owned by the brothers with each owning 33 1/3% of the
stock.
7. On XXXXX, XXXXX acquired 86.7% (21600
shares) of the stock of XXXXX in exchange for its own stock. The remaining 13.3% (400 shares) was
retained by XXXXX pending the settlement of a divorce.
8. For periods of time prior to the acquisition
by XXXXX, XXXXX filed separate Utah corporate franchise tax returns.
9. In order to conform their tax year to the
tax year of XXXXX, XXXXX filed a separate corporate franchise tax return for
the short tax year XXXXX to XXXXX. The
return reported a current year's loss of $$$$$ and reported $$$$$ of prior
years' losses as being available for carryover.
10. On XXXXX, the name of XXXXX was changed to
XXXXX (hereafter "XXXXX").
11. On XXXXX, the divorce was settled and the
remaining 400 shares of XXXXX were acquired by XXXXX.
12. On XXXXX, XXXXX was merged into XXXXX.
XXXXX
13. Prior to XXXXX, the XXXXX shares of stock of
XXXXX (hereafter "XXXXX") were owned as follows:
XXXXX XXXXX
XXXXX XXXXX
XXXXX XXXXX
XXXXX XXXXX
14. On XXXXX, XXXXX acquired XXXXX's and XXXXX's
stock in XXXXX in exchange for its own stock, giving XXXXX an 81% ownership in
XXXXX.
15. XXXXX redeemed the shares owned by XXXXX and
XXXXX during the following two years, leaving XXXXX with 100% ownership in
XXXXX.
16. For periods of time prior to the XXXXX
acquisition by XXXXX, XXXXX filed separate Utah corporate franchise tax
returns.
17. In order to conform their tax year to the
tax year of XXXXX, XXXXX filed a separate corporate franchise tax return for
the short tax year XXXXX to XXXXX. The
return reported a current year's loss of $$$$$.
18. XXXXX's separate return loss was first
carried back to prior XXXXX separate returns, where $$$$$ (as determined by Tax
Commission adjustment) was applied to offset income, thus leaving $$$$$ of the
loss available to be carried forward.
CONSOLIDATED RETURNS AND
AUDIT
19. Starting with the fiscal year ending XXXXX, XXXXX,
and later XXXXX, joined with its subsidiaries in filing Utah consolidated
corporate franchise tax returns.
20. In XXXXX, XXXXX filed amended consolidated
franchise tax returns for the years ending XXXXX, XXXXX, XXXXX, and XXXXX which
followed amended federal income tax returns and reflected errors made on
previously filed returns.
21. In its amended consolidated return for the
fiscal year ending XXXXX, XXXXX carried over $$$$$ of XXXXX's separate return
loss and applied it to offset consolidated income.
22. In its amended consolidated return for the
fiscal year ending XXXXX, XXXXX carried over $$$$$ of XXXXX's separate return
loss and applied it to offset consolidated income.
23. In XXXXX the Auditing Division began
examining these amended returns and in a audit report dated XXXXX, disallowed
the carryovers of the separate return losses on the consolidated returns.
24. XXXXX filed a Petition for Redetermination
on XXXXX.
25. On XXXXX, the Auditing Division responded to
XXXXX petition and reiterated its position.
26. On XXXXX, XXXXX filed a Request for Hearing
before the Tax Commission in order to orally present arguments prior to the Tax
Commission's rendering a final decision on their petition.
VERIFICATION
STATE OF UTAH :
) ss
COUNTY OF SALT
LAKE :
I hereby certify that
I have read the statements of fact that are contained in the foregoing
Stipulation of Facts and verify that they are true and correct to the best of
my knowledge.
XXXXX
Tax Manager
XXXXX
Subscribed and sworn
to before me this XXXXX.
Notary Public
My Commission expires: Residing
at:
XXXXX DATED:
XXXXX
Attorney for Petitioner
DATED: XXXXX
XXXXX
Assistant Attorney General
Attorney for Respondent
^^