- 27 -
merits of either position. In fact, the legislative history
states that "these finance subsidiary arrangements do in form
satisfy the requirements for an exemption from the withholding
tax and a number of legal arguments would support the taxation of
these arrangements in accordance with their form." S. Prt. 98-
169 (Vol. I), at 419 (1984). Lastly, the legislative history
states:
No inference should be drawn from this rule regarding
the proper resolution of other tax issues. The
conferees do not intend this provision to serve as
precedent for the U.S. tax treatment of other
transactions involving tax treaties or domestic tax
law. [H. Conf. Rept. 98-861, at 938 (1984), 1984-3
C.B. (Vol. 2) 1, 192; emphasis added.]
See also S. Prt. 98-169 (Vol. I), at 418 n.1 (1984).
The fact that Congress made the safe harbor provisions of
DEFRA section 127(g)(3) contingent on meeting the requirements of
preexisting revenue rulings does not mean that such requirements
must be met in order for the legal substance of these financing
transactions to be recognized. Congress was presumably trying to
provide a safe harbor for taxpayers who had complied with the
revenue rulings. As already indicated, Congress did not intend
DEFRA section 127(g)(3) to be the exclusive means by which a
taxpayer could claim exemption from the 30-percent withholding
tax. Moreover, Congress drew no conclusions regarding the
respective positions taken by taxpayers and the Government on
whether these transactions would qualify for exemption from
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