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(2) The term "foreign country" means any foreign
state, any possession of the United States, and any
political subdivision of any foreign state or of any
possession of the United States. * * *
Initially, we note that our reasoning in respect of the
existence of a refund disposes of any question of a direct
subsidy within the meaning of section 1.901-2(e)(3)(i), Income
Tax Regs. Indeed, respondent does not contend that the credit
constituted a direct subsidy. Rather, she has focused on the
existence of an indirect subsidy.
At the outset, we note that the existence of an indirect
subsidy does not depend upon finding that the U.S. taxpayer
derived an actual economic benefit. Norwest Corp. v.
Commissioner, 69 F.3d 1404 (8th Cir. 1995), affg. T.C. Memo.
1992-282; see also Continental Illinois Corp. v. Commissioner,
998 F.2d 513, 519-520 (7th Cir. 1993), affg. in part and revg. in
part T.C. Memo. 1991-66, affg. T.C. Memo. 1989-636, and affg. in
part and revg. in part T.C. Memo. 1988-318. We note, however,
that such a principle does not mean that no person involved in
the transaction need derive any benefit. In fact, the parties
agree that the key question is whether EGPC benefitted from the
credits of Amoco Egypt's taxes which it took against its own
income taxes. Petitioner argues that EGPC, although a separate
legal entity, should be considered part of the Egyptian
Government and that, as a result, EGPC is not "another person"
within the meaning of section 1.901-2(e)(3)(ii), Income Tax
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