ASAT, Inc. - Page 1

                                   108 T.C. No. 11                                    

                               UNITED STATES TAX COURT                                

                              ASAT, INC., Petitioner v.                               
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 3173-95.                    Filed March 31, 1997.           

                    P, a wholly owned domestic subsidiary, purchased                  
               assembly services from its parent, a foreign                           
               corporation.  During an IRS audit of P's 1991 Federal                  
               corporate income tax return, the IRS notified P that it                
               would need to be appointed its parent's limited agent                  
               under sec. 6038A(e)(1), I.R.C.  P did not obtain the                   
               authorization of agent before R issued a notice of                     
               deficiency.  Consequently, pursuant to sec.                            
               6038A(e)(3), I.R.C., which grants the Commissioner the                 
               authority to determine in her sole discretion the cost                 
               of goods sold and deductions arising out of                            
               transactions between a domestic corporation and a                      
               related foreign corporation, R determined that P's cost                
               of goods sold should be decreased and eliminated a net                 
               operating loss (NOL) carryforward which originated from                
               P's 1989 and 1990 tax years.  In addition, R disallowed                
               P's deduction for consulting fees paid to an unrelated                 
               domestic corporation and applied the accuracy-related                  

Page:   1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011