Bankamerica Corporation, as Successor in Interest to Continental Bank Corporation, as Successor in Interest to Continental Illinois REPORTS OF THE UNITED STATES TAX COURT BANKAMERICA CORPORATION, AS SUCCESSOR IN INTEREST TO CONTINENTAL BANK CORPORATION, AS SUCCESSOR IN INTEREST ΤΟ CONTINENTAL ILLINOIS CORPORATION, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT* Docket No. 5931-83. Filed July 15, 1997. P had deficiencies in its Federal income tax for years 1 and 2. In year 3, P carried back an amount of investment tax credit to years 1 and 2, reducing the amount of its deficiencies. In year 6, a net operating loss arose which was carried back to year 3. The carryback of the year 6 loss displaced a year 3 foreign tax credit, which was then carried back to years 1 and 2, displacing the investment tax credit originally taken in those years. R computed interest under sec. 6601, I.R.C., from the end of year 3 to the due date of the return for year 6 on deficiency amounts for years 1 and 2, calculated after the effect of the year 6 loss, without reducing the deficiencies by the amounts of ITC taken from year 3 to year 6. P filed a timely motion under sec. 7481(c), I.R.C., to redetermine interest. Held, P has made overpayments of interest for years 1 and 2 because R should have taken the investment tax credit amounts into account in calculating interest accru *This Court has issued five opinions under this docket number, each captioned Continental Ill. Corp. v. Commissioner: T.C. Memo. 1988-318, T.C. Memo. 1989-468, T.C. Memo. 1989-636, 94 T.C. 165 (1990), and T.C. Memo. 1991-66, relating to the tax liability of petitioner's predecessor for the tax years 1975 through 1979. Portions of the decisions in T.C. Memo. 1988-318, T.C. Memo. 1989-636, and T.C. Memo. 1991-66 were affirmed in part and reversed in part and remanded to this Court in Continental Ill. Corp. v. Commissioner, 998 F.2d 513 (7th Cir. 1993), cert. denied 510 U.S. 1041 (1994), and a decision was entered in accordance with the opinion of the Court of Appeals for the Seventh Circuit. Petitioner has filed a timely motion to redetermine interest. ing from the end of year 3 until the due date of the return Roger J. Jones and Jeffrey B. Frishman, for petitioner. Pamela V. Gibson and Richard G. Goldman, for respond ent. SUPPLEMENTAL OPINION TANNENWALD, Judge: A decision was entered in this case on November 17, 1994, pursuant to a stipulated computation, in accordance with the opinion of the Court of Appeals for the Seventh Circuit in Continental Ill. Corp. v. Commissioner, 998 F.2d 513 (7th Cir. 1993), cert. denied 510 U.S. 1041 (1994). On December 20, 1995, petitioner filed a timely motion under section 7481(c)1 and Rule 261 to redetermine interest for the 1977 and 1978 tax years, alleging that respondent has erroneously calculated such interest. The issue for decision is whether respondent has failed to take into account the carryback of a 1979 investment tax credit (ITC) and consequently overcharged petitioner for interest which accrued before the effect of a 1982 net operating loss (NOL) carryback. Background In 1983, respondent determined deficiencies against petitioner's predecessor in interest for the tax years 1975 through 1979. Petitioner's predecessor challenged these deficiencies in this Court, which issued the following five opinions, under this same docket number, each captioned Continental Ill. Corp. v. Commissioner: T.C. Memo. 1988–318, T.C. Memo. 1989-468, T.C. Memo. 1989-636, 94 T.C. 165 (1990), and T.C. Memo. 1991–66. Decision was entered on May 13, 1992 (the 1992 decision), and was based on Rule 155 computations (the 1992 computations) which took into account certain amounts of an ITC carried back from 1979. Portions of this Court's decision as reflected in T.C. Memo. 1988-318, T.C. Memo. 1989-636, and T.C. Memo. 1991-66 were appealed by the parties to the Court of Appeals for the 1 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. |