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In early November 1980, a second round of negotiations took
place between Amoco and EGPC, where Amoco representatives
communicated Nordberg's advice to EGPC, that EGPC could not be
allowed to credit Amoco Egypt's taxes against its tax liability.
EGPC indicated that it understood Amoco's position. However,
EGPC continued to indicate the credit practice, and keeping EGPC
whole, was an open issue through meetings in December 1980. At a
December 18, 1980, negotiating session, EGPC indicated that it
would drop the credit issue. It was understood by Amoco that
EGPC would deal with the ETD as far as being kept whole, but that
EGPC would not arrange with the ETD to take credits for Amoco
Egypt's taxes.
In November 1980, temporary regulations under section 901
were released, indicating that it would be permissible for U.S.
tax creditability purposes for a foreign national oil company to
pay a contractor's taxes. See sec. 4.901-2, Temporary Income Tax
Regs., 45 Fed. Reg. 75647, 75648 (Nov. 17, 1980). In light of
the temporary regulations, Amoco reviewed the EGPC negotiations
and planned for a new IRS ruling request on the existing MCA.
Part of Amoco's strategy was to protect its U.S. tax credits
claimed for 1979 and 1980.
In a January 1981 negotiation meeting, EGPC indicated that
it was attempting to get a reduction in the royalty rate it paid
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