- 92 -
unauthorized action. Respondent counters that the critical fact
is that EGPC took the credit and that whether such action was or
was not authorized is irrelevant.
As to the issue in respect of authorization, we note that
EGPC in fact took the credit in the pre-June 1980 years and that
collection based upon a disallowance of such action by the ETD
would have been barred by the period of limitations. Although,
as we have pointed out, see supra p. 74, the running of the
statute of limitations does not constitute approval of EGPC's
action, it is the equivalent to authorization in substantive
result. This circumstance raises the issue of an authorized
credit constituting a subsidy.
We find it unnecessary to resolve the differences between
the parties as to these two issues, i.e., payment16 or
authorization, because of our conclusion in respect of the
application of Example (3), particularly in light of the last
sentence of the example specifically exempting from the subsidy
rules a transaction which complies with its terms.
Respondent points to the reference to Example (3) in
Continental Illinois Corp. v. Commissioner, T.C. Memo. 1991-66,
affd. in part, revd. in part 998 F.2d 513 (7th Cir. 1993). In
that case, we cursorily dismissed Example (3) as inapplicable.
16 We note that, as our findings of fact show, EGPC in fact paid
Egyptian income taxes of Amoco Egypt, and they were specifically
credited to the latter's tax account by the ETD.
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