-19-
year in which it does not derive income from real property in the
United States. See Rev. Rul. 91-7, 1991-1 C.B. 110; see also
sec. 1.871-10(a), Income Tax Regs.
For purposes of section 882(a)(1), a foreign corporation
generally determines its taxable income by including in its gross
income only its effectively connected income. See sec.
882(a)(2). Whether the foreign corporation may claim deductions
against its gross income to arrive at taxable income depends on
section 882(c)(2). Under that section, a
foreign corporation shall receive the benefit of the
deductions and credits allowed to it in this subtitle
only by filing or causing to be filed with the
Secretary a true and accurate return, in the manner
prescribed in subtitle F, including therein all the
information which the Secretary may deem necessary for
the calculation of such deductions and credits. * * *
B. History of Relevant Provisions
1. Predecessors to Section 882(c)(2)
We trace section 882(c)(2) to its origin in section 233 of
the Revenue Act of 1928. There, Congress provided:
SEC. 233. ALLOWANCE OF DEDUCTIONS AND CREDITS.
A foreign corporation shall receive the benefit of
the deductions and credits allowed to it in this title
only by filing or causing to be filed with the
collector a true and accurate return of its total
income received from all sources in the United States,
in the manner prescribed in this title; including
therein all the information which the Commissioner may
deem necessary for the calculation of such deductions
and credits.
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