- 95 -
Government provided to their Brazilian borrowers. Norwest Corp. v.
Commissioner, 69 F.3d at 1408-1410; Continental Ill. Corp. v.
Commissioner, 998 F.2d at 519-520; Nissho Iwai Am. Corp. v.
Commissioner, 89 T.C. at 775-777 (1989); Bankers Trust New York
Corp. v. United States, supra at 35.48
Petitioner argues that the "subsidy * * * to the taxpayer"
language in the temporary and final regulations requires an
economic benefit analysis and asserts that petitioner itself
received no economic benefit from the pecuniary benefit the
Brazilian Government provided to Brazilian borrowers. Petitioner
points out that, in the case of Resolution 63 repass loans, it did
not even know the identity of the repass borrowers who received the
pecuniary benefit. It contends that if the regulations are applied
to require reduction of the Brazilian withholding tax potentially
creditable to petitioner by the pecuniary benefit the Brazilian
borrowers received, then the regulations are invalid. We disagree.
We hold that pursuant to section 4.901-2(f)(3)(ii), Temporary
Income Tax Regs., supra, and section 1.901-2(e)(3)(ii), Income Tax
Regs., the Brazilian withholding tax potentially creditable to
petitioner must be reduced by the pecuniary benefit the non-tax-
immune borrowers received. We further hold that the indirect
48 The position set forth in the temporary and final
regulations has been codified in sec. 901(i), which is effective
for foreign taxes paid or accrued in taxable years beginning
after Dec. 31, 1986. Tax Reform Act of 1986, Pub. L. 99-514, sec.
1204(a), 100 Stat. 2532; see Nissho Iwai Am. Corp. v.
Commissioner, 89 T.C. at 777 n.17.
Page: Previous 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 NextLast modified: May 25, 2011