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Where, as in the instant case, a foreign corporation fails
to file an income tax return, the interplay of section 882(c)(2)
and section 482 requires the denial of a correlative adjustment,
if such correlative adjustment is in the form of deductions the
taxpayer might have otherwise been entitled to claim had it filed
a timely, true, and accurate return. We note that allowing LTD
in the instant case to deduct its section 482 correlative
adjustment would produce an anomalous result with regard to LTD’s
section 882(c)(1)(A) deductions: The additional compensation
expenses allocated to LTD pursuant to section 482 would be
allowed but the compensation expenses already paid by LTD to INC
and the other business expenses (e.g., commissions to promoters,
etc.) would be disallowed pursuant to section 882(c)(2). As we
have discussed, supra pp. 185-188, LTD filed no return at all and
therefore failed to comply with the express requirement of
section 1.882-4(b)(1), Income Tax Regs. Consequently, we uphold
respondent’s disallowance of the deduction for LTD’s correlative
adjustment that LTD might have otherwise been entitled to claim
had it filed a timely, true, and accurate return pursuant to
section 882(c)(2).
F. Remaining Issues
1. Positions of the Parties
Petitioners make no argument on brief concerning the
remaining issues set forth below in this paragraph F.
Consequently, we consider such issues to have been conceded.
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