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We first examine whether INC is a controlled taxpayer within
the meaning of section 1.482-1(a)(4), Income Tax Regs. INC was a
wholly owned subsidiary of LTD, directly, during the taxable
years ended June 30, 1985 and 1986, and indirectly, through the
insertion of a holding company, Holdings, during the subsequent
taxable years in issue. Consequently, we conclude that LTD
controlled INC within the meaning of section 1.482-1(a)(3),
Income Tax Regs., and that INC is a controlled taxpayer within
the meaning of section 1.482-1(a)(4), Income Tax Regs.
Additionally, because the same interests that own LTD also own
INC, we conclude that LTD and INC constitute a "group of
controlled taxpayers" within the meaning of section 1.482-
1(a)(5), Income Tax Regs.
We turn next to whether INC provides the required services
pursuant to section 1.482-2(b)(1), Income Tax Regs. INC provides
administrative services to LTD. INC handles the daily operations
of LTD’s pooled investments program and its funds, performs
research and bookkeeping, and produces the monthly client
statements. INC and LTD are each members of a group of
controlled entities. Consequently, INC provides administrative
or other services for the benefit of another member of the group
of controlled entities within the meaning of section 1.482-
2(b)(1), Income Tax Regs.31
31
We have previously noted that "sec. 1.482-2(b)(1), Income
Tax Regs., applies to a group of controlled 'entities' while sec.
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