UNITED STATES TAX COURT



  INTERMET CORPORATION & SUBSIDIARIES, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8246-97.              Filed December 8, 1998.



     P is the common parent of an affiliated group of
corporations (the group) that included L during the
period from 1984 to 1993. Pursuant to sec.
172(b)(1)(C), I.R.C., P seeks to carry back, to 1984,
certain expenses incurred by L during 1992. For 1992
the group had a consolidated net operating loss as
defined in sec. 1.1502-21A(f), Income Tax Regs., and L
had separate taxable income as defined in sec. 1.1502-
12, Income Tax Regs.
     Held: The expenses in issue do not qualify for
the 10-year carryback provided in sec. 172(b)(1)(C),
I.R.C., because the expenses do not qualify as
specified liability losses (SLL's) within the meaning
of sec. 172(f), I.R.C. The expenses do not qualify as
SLL's within the meaning of sec. 172(f), I.R.C.,
because they were not taken into account in computing
the net operating loss for the year as required by sec.
172(f)(1), I.R.C. Secs. 1.1502-21A(f), 1.1502-12,
Income Tax Regs.
                                - 2 -




     Eric R. Fox, Hamish P.M. Hume, and Clifton B. Cates III, for

petitioner.

     Wilton A. Baker, Alfred C. Bishop, Jr., Steven J. Hankin,

Richard Osborne, and Teri A. Culberton, for respondent.



     WELLS, Judge:   Respondent determined a deficiency in

petitioner Intermet Corporation's (Intermet) Federal income tax

in the amount of $615,019 for 1984.     The deficiency arose out of

respondent's disallowance of Intermet's specified liability loss

carryback from 1992 to 1984.    After concessions by petitioner,

the issues to be decided are:    (1) Whether, for purposes of the

10-year carryback provided in section 172(b)(1)(C), certain

expenditures incurred by Lynchburg Foundry Co. (Lynchburg), a

member of the Intermet consolidated group, qualify as "specified

liability loss" within the meaning of section 172(f), and, if so,

(2) to what extent the specified liability losses may be carried

back by the consolidated group.    Unless otherwise indicated, all

section references are to the Internal Revenue Code in effect for

the year in issue.

                         FINDINGS OF FACT

     The parties submitted the instant case on the basis of fully

stipulated facts and certain stipulated exhibits.    The parties'
                               - 3 -


stipulation of facts is incorporated in this opinion by reference

and found accordingly.

     Intermet, a Georgia corporation, had its principal office in

Troy, Michigan, when it filed the petition in the instant case.

Intermet is the common parent of an affiliated group of

corporations (the group) that manufactures precision iron

castings for automotive and industrial equipment producers.    For

calendar years 1984 through 1993, the group filed consolidated

Federal income tax returns.   During those years, all members of

the group used the accrual method of accounting for both

financial accounting and Federal income tax purposes.    Lynchburg

was a member of the group during each year from 1984 through

1993.

     On its 1992 consolidated Federal income tax return, the

group reported a consolidated net operating loss (CNOL) in the

amount of $25,701,038.   During October 1994, the group filed Form

1120X, Amended U.S. Corporation Income Tax Return, claiming a

carryback to 1984 for specified liability losses incurred during

1992, in the amount of $1,227,973.     During 1992, the group's CNOL

exceeded the sum of the claimed specified liability losses.

     Members of the group that claimed specified liability losses

reported separate taxable income, as defined in section 1.1502-

12, Income Tax Regs., and specified liability loss deductions as

follows:
                               - 4 -



                                                  Specified
                               Separate         Liability Loss
       Member               Taxable Income        Deductions

Lynchburg Foundry Co.         $3,940,085          $1,126,467
Intermet Corp.                 1,879,425              71,643
Columbus Foundries, Inc.       6,720,377              30,045
Commercial & Precision
  Machining, Inc.             (3,123,021)             49,818

     In the notice of deficiency, issued on March 14, 1997,

respondent disallowed the group's claimed carryback, except to

the extent of $49,818, which was the amount of the specified

liability loss deductions reported by Commercial & Precision

Machining, Inc.   Petitioner conceded the group's claimed

carryback to the extent of $208,949.77, and the parties have

stipulated that the remainder of the carryback, $1,019,205.23, is

attributable solely to specified liability loss deductions

claimed by Lynchburg during 1992.

     The disallowed specified liability losses in issue consist

of the following amounts paid by Lynchburg, during 1992, for

State tax deficiencies, interest on those deficiencies, and

interest on a Federal income tax deficiency:

        Disallowed Specified Liability Losses           Amount

     State tax deficiencies                          $717,617.00
     Interest on State tax liabilities                299,412.63
     Interest on a Federal income tax deficiency        2,175.60

     The aforementioned State taxes and interest arose out of the

State of Michigan's audit of Lynchburg's 1986, 1987, and 1988

Michigan Single Business Tax returns.   During 1992, Lynchburg
                                - 5 -


paid the Michigan Single Business Tax deficiencies and the

related interest.   The aforementioned interest on a Federal

income tax deficiency arose out of an audit by the Internal

Revenue Service (the Service) of the group's consolidated Federal

income tax returns for 1987 and the resulting adjustment to

Lynchburg's separate taxable income for that year.    During 1992,

Lynchburg and the Service resolved their differences, and

Lynchburg paid interest on its agreed upon 1987 Federal income

tax deficiency.   During 1992, Lynchburg properly deducted the

additional State taxes and interest it paid during that year.

                               OPINION

     Section 172(a) allows a "net operating loss deduction" for

the aggregate of net operating loss carrybacks and carryovers to

the taxable year.   The term "net operating loss" (NOL) is defined

in section 172(c) to mean the excess of deductions allowed by

chapter 1 over gross income.   Section 172(b) provides the

carryback and carryover periods for NOL's.   Section 172(b)(1)(A)

generally provides that the carryback period for an NOL is 3

years and that the carryover period is 15 years.1    Section

172(b)(1)(C) provides a special rule that extends the carryback

period from 3 years to 10 years for specified liability losses.


1
     Effective for taxable years beginning after Aug. 5, 1997,
the carryback period for an NOL is 2 years and the carryforward
period is 20 years. Taxpayer Relief Act of 1997, Pub. L. 105-34,
sec. 1082(a), 111 Stat. 950.
                              - 6 -


The term "specified liability loss" (hereinafter SLL) is defined

in section 172(f)2, which states in part:

          SEC. 172(f). Rules Relating to Specified Liability
     Loss.-- For purposes of this section--

               (1) In General.--The term "specified
     liability loss" means the sum of the following
     amounts to the extent taken into account in
     computing the net operating loss for the taxable     year:


          *      *      *      *      *      *      *

                    (B) Any amount (not described in
     subparagraph (A)) allowable as a
     deduction under this chapter with
     respect to a liability which arises
               under a Federal or State law or out of
               any tort of the taxpayer if--

                         (i) in the case of a liability
                    arising out of a Federal or State
          law, the act (or failure to act)
          giving rise to such liability
          occurs at least 3 years before the
          beginning of the taxable year

          *      *      *      *      *      *      *

          A liability shall not be taken into account under
          subparagraph (B) unless the taxpayer used an
     accrual method of accounting throughout the period or
     periods during which the acts or failures to      act
     giving rise to such liability occurred.

               (2) Limitation.--The amount of the specified
          liability loss for any taxable year shall not exceed

2
     The Omnibus Budget Reconciliation Act of 1990 (OBRA 1990),
Pub. L. 101-508, sec. 11811(b), 104 Stat. 1388-532, combined
former secs. 172(j) (relating to product liability losses) and
172(k) (relating to deferred statutory or tort liability losses)
redesignating them sec. 172(f), effective for NOL's for taxable
years beginning after Dec. 31, 1990, OBRA 1990, sec. 11811(c),
104 Stat. 1388-534.
                                - 7 -


           the amount of the net operating loss for such taxable
           year.

     The consolidated return regulations provide rules concerning

the determination and use of NOL's in the consolidated return

context.   Section 1.1502-11(a), Income Tax Regs., prescribes that

consolidated taxable income is to be determined by taking into

account the separate taxable income of each member of the group

and, among other things, "Any consolidated net operating loss

deduction".   

Income Tax Regs.,3

provides that the CNOL deduction is equal to the aggregate of the

CNOL carryovers and carrybacks to the taxable year.    In pertinent

part, section 1.1502-21A(b)(1), Income Tax Regs., provides that

the CNOL carryovers and carrybacks to the taxable year shall

consist of any of the group's CNOL's that may be carried back or

over to the taxable year under the provisions of section 172(b).

3
     During 1996, the Department of the Treasury promulgated sec.
1.1502-21T, Temporary Income Tax Regs., 61 Fed. Reg. 33328 (June
27, 1996), generally effective for consolidated return years
beginning on or after Jan. 1, 1997, sec. 1.1502-21T(g)(1),
Temporary Income Tax Regs., 61 Fed. Reg. 33333 (June 27, 1986).
Former sec. 1.1502-21, Income Tax Regs., was redesignated sec.
1.1502-21A, Income Tax Regs., generally effective for
consolidated return years beginning before Jan. 1, 1997. T.D.
8677, 1996-2 C.B. 119, 127. In certain circumstances, a
consolidated group may apply the temporary regulations to all
consolidated return years ending on or after Jan. 29, 1991, and
beginning before Jan. 1, 1997. Sec. 1.1502-21T(g)(3), Temporary
Income Tax Regs, 61 Fed. Reg. 33333 (June 27, 1986). The
consolidated return year in issue began before Jan. 1, 1997, and
neither party contends that the temporary regulations apply in
the instant case. Accordingly, it is undisputed that sec.
1.1502-21A, Income Tax Regs., applies to the consolidated return
year in issue.
                               - 8 -


Section 1.1502-21A(f), Income Tax Regs., provides that the CNOL

shall be determined by taking into account the separate taxable

income, "as determined under § 1.1502-12", of each member of the

group and certain enumerated consolidated items.4   Finally,

section 1.1502-12, Income Tax Regs., provides that the separate

taxable income of a member, "including a case in which deductions

exceed gross income", is determined, with certain modifications,

as if the member were not a member of the group.




4
     Sec. 1.1502-21A(f), Income Tax Regs., reads as follows:

          (f) Consolidated net operating loss. The
     consolidated net operating loss shall be determined by
     taking into account the following:

               (1) The separate taxable income (as
          determined under § 1.1502-12) of each member of
          the group, computed without regard to any
          deduction under section 242;

               (2) Any consolidated capital gain net income
          (net capital gain for taxable years beginning
          before January 1, 1977);

               (3)   Any consolidated section 1231 net loss;

               (4) Any consolidated charitable
          contributions deduction;

               (5) Any consolidated dividends received
          deduction (determined under § 1.1502-26 without
          regard to paragraph (a)(2) of that section); and

               (6) Any consolidated section 247 deduction
          (determined under § 1.1502-27 without regard to
          paragraph (a)(1)(ii) of that section).
                               - 9 -


     In the instant case, petitioner contends that the group

properly carried back, to 1984,5 the taxes and interest paid by

Lynchburg during 1992.   Petitioner argues that the taxes and

interest in issue constitute SLL's within the meaning of section

172(f)(1)(B) because (1) the liabilities arose out of State and

Federal law, (2) the act (or failure to act) giving rise to the

liabilities occurred more than 3 years before 1992,6 and (3) all

members of the group used the accrual method of accounting

throughout the period during which the acts or failures to act

giving rise to the liabilities occurred.   Additionally,

petitioner contends that, pursuant to section 172(f)(2), the

entire amount of the SLL's in issue may be carried back to 1984

because the amount claimed as SLL's for 1992 does not exceed the

amount of the CNOL reported by the group for 1992.   Section

172(f)(2) does not state whether the limitation provided by that

section applies to each individual member of a consolidated group

or to the group as a whole.7   Petitioner contends, however, that

5
     Notwithstanding the 10-year carryback period provided in
sec. 172(b)(1)(C), SLL's may not be carried back to any taxable
year beginning before Jan. 1, 1984. OBRA 1990, sec.
11811(b)(2)(B), 104 Stat. 1388-533.
6
     Petitioner contends that the tax deficiencies and interest
liabilities in issue arose simultaneously from the group's
failure to file accurate State and Federal income tax returns.
7
     If sec. 172(f)(2) is to be applied on a consolidated basis,
all of the deductions in issue (that otherwise qualify as SLL's
within the meaning of sec. 172(f)) would be eligible for the 10-
                                                   (continued...)
                              - 10 -


the limitation must be applied to the group as a whole because

(1) under the consolidated return regulations an NOL in a

consolidated group exists only on a consolidated basis, and (2)

each separate member of a consolidated group is incapable of

having its own NOL.   Accordingly, petitioner concludes that

section 172(f)(2) can be applied in the consolidated group

context only by comparing the consolidated group's SLL8 for the

year with the consolidated group's CNOL for the year.

     Respondent contends that petitioner is not entitled to carry

back, to 1984, any of the deductions attributable to the taxes

and interest paid by Lynchburg during 1992.   Respondent argues

that the taxes and interest in issue do not qualify for the 10-

year carryback because they are not SLL's within the meaning of

section 172(f)(1)(B).   Specifically, respondent argues that

section 172(f)(1)(B) was intended to apply to a "narrow class of

liabilities" to which the taxes and interest in issue do not


7
 (...continued)
year carryback because the group's consolidated net operating
loss (CNOL) for 1992 exceeds the amount claimed as SLL's for
1992. If, however, sec. 172(f)(2) is to be applied on a separate
company basis, none of the deductions in issue would be eligible
for the 10-year carryback, whether or not they otherwise qualify
as SLL's under sec. 172(f), because Lynchburg had separate
taxable income rather than a loss for 1992.
8
     Other members of the group claimed SLL's for 1992.
Respondent allowed the carryback of some of the claimed SLL's in
the notice of deficiency, and petitioner conceded that it is not
entitled to carryback some of the claimed SLL's. The only SLL's
that remain in issue are those claimed by Lynchburg for 1992.
                              - 11 -


belong.   See, e.g., Sealy Corp. v. Commissioner, 

,

186 (1996).9   Additionally, respondent contends that, even if the

deductions for the taxes and interest in issue qualify as SLL's

under section 172(f)(1)(B), petitioner is not entitled to a

carryback for those deductions because they were not taken into

account in computing the group's CNOL for the year as required by

section 172(f)(1).   Respondent asserts that the deductions in

issue were not taken into account in computing the group's 1992

CNOL because they were exhausted by Lynchburg's 1992 separate

income.

     The first issue we consider is whether the deductions for

the taxes and interest in issue were taken into account in

computing the NOL for the year as required by section 172(f)(1).

Lynchburg, with gross income in excess of allowable deductions,

had no NOL for 1992.   See sec. 172(c).   Accordingly, none of the

deductions in issue were taken into account in computing an NOL

with respect to Lynchburg.   Accordingly, we must decide whether

the deductions in issue were taken into account in the

computation of the group's 1992 CNOL.

     A review of section 172 and the consolidated return

regulations reveals that a member with separate taxable income

cannot contribute to the group's CNOL.    Although the consolidated


9
     In light of our holding, infra, it is unnecessary for us to
reach this issue.
                              - 12 -


return regulations speak in terms of a CNOL, see sec. 1.1502-21A,

Income Tax Regs., it is quite clear that the CNOL is to be

determined by taking into account the separate taxable income (or

loss) of each member of the group.     See Norwest Corp. and Subs.

v. Commissioner, 

, 170 (1998); secs. 1.1502-21A(f),

1.1502-12, Income Tax Regs.   Under section 1.1502-21A(f), Income

Tax Regs., the CNOL is computed by combining the separate taxable

income or losses of the members and then adjusting for certain

items that are taken into account on a consolidated basis.

     Accordingly, under the regulations, the first step in

determining the CNOL is to compute the separate taxable income

(or loss) of each member.   Pursuant to section 1.1502-12, Income

Tax Regs., the separate taxable income (or loss) of a member is

computed, with certain modifications, as if the member were a

separate corporation.   The computation of separate taxable income

(or loss) under section 1.1502-12, Income Tax Regs., excludes

certain items that are taken into account on a consolidated basis

including:   NOL's, capital gains and losses, section 1231 gains

and losses, charitable contributions, and the dividends received

deduction.   See sec. 1.1502-12(h) through (l), (n), Income Tax

Regs.   SLL's are not included among the modifications to the

computation of separate taxable income under section 1.1502-12,

Income Tax Regs.
                              - 13 -


     The next step in the determination of the CNOL is to combine

the separate taxable incomes and losses of the members.    In the

aggregation of the separate taxable income and losses, current

losses of members offset current income of other members.

Certain specified consolidated items are then taken into account.

See sec. 1.1502-21A(f), Income Tax Regs.   SLL's are not listed

among the items which are to be taken into account on a

consolidated basis under section 1.1502-21A(f), Income Tax Regs.

     The consolidated return regulations specifically identify

several items that are to be treated on a consolidated basis.

Those regulations, however, do not use the term "consolidated

specified liability loss" or incorporate such a concept by

directing that SLL's be treated on a consolidated basis.

Consequently, we conclude that SLL's are not to be taken into

account separately as consolidated items for purposes of

computing the group's CNOL.   See, e.g., Amtel Inc. v. United

States, 

, 602 (1994), affd. without published

opinion 

(Fed. Cir. 1995) (court rejected the concept

of a "consolidated product liability loss" under the consolidated

return regulations).   Instead, SLL's are to be netted against the

member's items of income in the computation of separate taxable

income (or loss) under section 1.1502-12, Income Tax Regs.

     When allowable deductions exceed gross income, the result is

an NOL, sec. 172(c), and the excess may be carried backward or
                              - 14 -


forward to offset income in other years, sec. 172(a) and (b).     No

provision, however, allows the same deduction to be used against

income of both current and noncurrent years.   Simply put, once a

deduction is absorbed by income from the current year, it is no

longer available as an NOL to be carried backward or forward.

Under the consolidated return regulations, SLL's are netted, in

the first instance, against the current income of the individual

member and then against the income of the group.   Secs. 1.1502-

21A, 1.1502-12, Income Tax Regs.   If the SLL's are totally

absorbed by the current income items of the member in the

computation of its separate taxable income under section 1.1502-

12, Income Tax Regs., as in the instant case, those deductions

are exhausted and cannot be used again by the group, as SLL's,

against income in carryback years.10   In effect, a member that

has separate taxable income within the meaning of section 1.1502-

12, Income Tax Regs., has no SLL to be carried back because the

SLL expenses have been used to offset the member's income

currently.   Consequently, the SLL expenditures of a member with


10
     A consolidated group with a CNOL would, however, be eligible
to carry back the SLL deductions of a member that has separate
loss, within the meaning of sec. 1.1502-12, Income Tax Regs.    In
that case, the SLL deductions would be absorbed neither by the
individual member's gross income, in the computation of separate
taxable income (or loss) under sec. 1.1502-12, Income Tax Regs.,
nor by the separate taxable incomes of the other members in the
aggregation of the member's separate taxable incomes and losses
under sec. 1.1502-21A(f)(1), Income Tax Regs.
                               - 15 -


separate taxable income, computed under section 1.1502-12, Income

Tax Regs., are not taken into account in the computation of the

consolidated group's CNOL as required by section 172(f)(1).

     Lynchburg had separate taxable income after taking into

account its allowable deductions, including the deductions for

the taxes and interest in issue.    Accordingly, we conclude that

the deductions for the taxes and interest in issue do not qualify

as SLL's, within the meaning of section 172(f), because they were

not taken into account in the computation of the group's CNOL as

required by section 172(f)(1).

     Petitioner contends that the consolidated return regulations

require a unified computation of the group's NOL at the

consolidated level.    Accordingly, petitioner contends, the sum of

the deductions attributable to SLL's of all the members of the

group are used to calculate the group's CNOL regardless of

whether any particular member has positive or negative separate

taxable income.    The sum of such deductions, petitioner argues,

limits the amount of the group's CNOL that may be carried back 10

years.    In essence, petitioner argues that SLL's should be

considered solely on a consolidated basis.

     Congress delegated broad authority to the Commissioner to

establish regulations for filing consolidated returns.    Sec.

1502.    In order to qualify for treatment as a consolidated group,

all members must agree to be bound by the consolidated return
                               - 16 -


regulations as promulgated by the Commissioner.    Sec. 1501.   As

we see it, petitioner's position ignores those regulations.

Section 1.1502-21A(f), Income Tax Regs., provides the exclusive

method for computing the NOL of a consolidated group.    The

computation of the CNOL under section 1.1502-21A(f), Income Tax

Regs., begins with the computation of each member's separate

taxable income under section 1.1502-12, Income Tax Regs.

Accordingly, the CNOL is not computed purely on a consolidated

basis.   Moreover, as discussed supra at 12, SLL's are not treated

on a consolidated basis under the consolidated return

regulations.   Similarly, there is no provision in the Code for a

consolidated SLL.11   As neither the Code nor the regulations

direct that SLL's are to be treated on a consolidated basis, and,

in light of the general principle that deductions are construed

narrowly, INDOPCO, Inc., v. Commissioner, 

, 84 (1992);

Commissioner v. National Alfalfa Dehydrating & Milling Co., 

, 149 (1974), we must reject petitioner's position.     See,

e.g., Amtel Inc. v. United 

at 602.

     Petitioner contends that its position is in harmony with the

underlying purpose of the consolidated return regulations, which

is to tax an affiliated group of corporations as a single


11
     By contrast, Congress has directed single entity treatment
for purposes of sec. 172 with respect to corporate equity
reduction interest loss as defined in sec. 172(h). See sec.
172(h)(4)(C).
                              - 17 -


economic business unit.   See Amorient, Inc. v. Commissioner, 

, 168 (1994).   Those regulations, however, do not treat a

consolidated group on a pure single entity basis for purposes of

computing the CNOL.   See secs. 1.1502-21A(f), 1.1502-12, Income

Tax Regs.   Because Lynchburg had no separate loss under section

1.1502-12, Income Tax Regs., Lynchburg had no SLL.    Rather,

Lynchburg's SLL deductions were offset by its 1992 gross income.

Because Lynchburg's SLL deductions were absorbed by its current

income, those deductions were not taken into account in computing

the group's CNOL.   Accordingly, the group's CNOL did not include

any SLL attributable to Lynchburg.     Where a group has deductions

in excess of gross income, the group cannot characterize part of

its CNOL as SLL merely because a member had deductions of a type

that would otherwise qualify as SLL.12

     Petitioner contends that Amtel Inc. v. United 

,

and Norwest Corp. and Subs. v. 

, are readily

distinguishable from the instant case.13    Although neither case

12
     As discussed infra, because we conclude that the deductions
for the taxes and interest in issue were not taken into account
in the computation of the group's CNOL, we do not consider
whether the deductions for taxes and interest otherwise qualify
as SLL within the meaning of sec. 172(f).
13
     Petitioner also cites an unpublished Order from the United
States District Court for the Western District of North Carolina
in United Dominion Indus., Inc. v. United States, 

, 98-2 U.S.T.C. par. 50527 (W.D.N.C. 1998), as support for
its position. On facts similar to the instant case, the court in
United Dominion examined the interplay between sec. 172(j),
                                                   (continued...)
                             - 18 -


is factually on point with the instant case,14 we cited both

cases in our analysis above because they offer insight into the

operation of the consolidated return regulations as they relate

to the NOL of a consolidated group.

     In light of our holding that the deductions for the taxes

and interest in issue do not qualify as SLL's within the meaning

of section 172(f), because they were not taken into account in

the computation of the group's CNOL as required by section

172(f)(1), it is unnecessary to reach the parties' arguments

concerning the application of section 172(f)(1)(B) and (f)(2) to

the instant case.




13
 (...continued)
I.R.C. 1954, and the consolidated return regulations. The court
found that the parent of a consolidated group could carry back,
to a consolidated year, product liability losses (PLL's), as
defined in sec. 172(j), I.R.C. 1954, attributable to a member of
the group that had separate taxable income. Sec. 172(j), I.R.C.
1954, defined a PLL as the lesser of the NOL or the sum of the
deductions attributable to expenses related to product liability.
The court concluded that because the individual member's PLL's
were less than the group's CNOL, the group was entitled to carry
back the member's PLL deductions. United Dominion is clearly
distinguishable from the instant case because sec. 172(j), I.R.C.
1954, predecessor to sec. 172(f)(1)(A), did not contain the
language in sec. 172(f)(1) which limits SLL's to those that are
taken into account in the computation of the NOL for the year.
14
     Amtel Inc. v. United States, 

, 602 (1994)
affd. 

(1995), concerned the carryback of product
liability losses as defined in sec. 172(j), predecessor to sec.
172(f)(1)(A), to a separate return year. Norwest Corp. and Subs.
v. Commissioner, 

, 170 (1998), concerned the
carryback of a consolidated group's CNOL attributable to bank
member's bad debts under sec. 172(b)(1)(L).
                             - 19 -


     We have considered the parties' remaining arguments and

conclude that they are without merit.

     To reflect the foregoing,

                                      Decision will be entered

                                 for respondent.