ASAT, Inc. - Page 22

                                       - 22 -                                         
                    (3) Foreign related party transactions for which                  
               only monetary consideration is paid or received by the                 
               reporting corporation.  If the related party is a                      
               foreign person, the reporting corporation must set                     
               forth on Form 5472 the dollar amounts of all reportable                
               transactions for which monetary consideration * * * was                
               the sole consideration paid or received during the                     
               taxable year of the reporting corporation. * * * The                   
               types of transactions described in this paragraph are:                 
                              *   *   *   *   *   *   *                               
                         (v) Consideration paid and received for                      
                    technical, managerial, engineering,                               
                    construction, scientific, or other services;                      
                              *   *   *   *   *   *   *                               
                         (x) Other amounts paid or received not                       
                    specifically identified in this paragraph                         
                    (b)(3) to the extent that such amounts are                        
                    taken into account for the determination and                      
                    computation of the taxable income of the                          
                    reporting corporation.                                            
          The above provisions defining a transaction are very broad.                 
          Indeed, petitioner does not dispute, and we hold, that it engaged           
          in transactions with a related party for its taxable year ending            
          April 30, 1991, when it contracted with and paid for assembly               
          services by ASAT, Ltd.  Petitioner nevertheless maintains that              
          section 6038A is inapplicable for the reasons set forth below.              
          Before those reasons are examined, however, a review of the                 
          statute's background is in order to provide context to an                   
          analysis of the statute and the parties' arguments.                         
               4.   Background of Section 6038A                                       
               Section 6038A, as originally enacted in 1982, imposed                  
          reporting requirements on foreign controlled U.S. corporations              





Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011