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to deduct pursuant to section 882(c). Pursuant to Blenheim Co.
v. Commissioner, 125 F.2d 906 (4th Cir. 1942), and Georday
Enters., Ltd. v. Commissioner, 126 F.2d 384 (4th Cir. 1942),
discussed supra pp. 185-188, however, we hold that LTD is
precluded from receiving the benefits of any deductions it might
have otherwise been entitled to claim had it filed a timely,
true, and accurate return pursuant to section 882(c)(2). In the
instant case, the correlative adjustment to LTD’s income is in
the form of a deduction pursuant to section 882(c)(1)(A).
Accordingly, LTD will not be entitled to a correlative adjustment
to its income.
We have previously addressed the issue of double taxation
with regard to a section 482 correlative adjustment. In Collins
Electrical Co. v. Commissioner, 67 T.C. 911 (1977), we made a
primary adjustment against the taxpayer without addressing the
issue whether the related party, not a party to the action then
before us, would ultimately receive its correlative adjustment.
We cautioned, however:
We do not intend our holding on this issue to be read to
sanction a double tax on the same income--a tax as a result
of the primary adjustment without an accompanying
correlative adjustment. Section 482 indeed contemplates
that when the Commissioner allocates income to one commonly
controlled organization he will make a correlative
adjustment in the income of the other. * * * [Id. at 922-
923; fn. ref. omitted; citations omitted.]
In Collins Electrical Co. and the cases cited therein, however,
we were not confronted with the additional factor of a foreign
corporation’s failure to file an income tax return.
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