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and branches of foreign corporations. The Omnibus Budget
Reconciliation Act of 1989, Pub. L. 101-239, sec. 7403, 103 Stat.
2358, added record maintenance requirements that were broadened
by the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-
508, sec. 11315(a), 104 Stat. 1388, to affect all open years.
The IRS issued final implementing regulations on June 19, 1991.
Sec. 1.6038A-1, Income Tax Regs., 56 Fed. Reg. 28056 (June 19,
1991). Section 6038A was drafted to aid the IRS in enforcement
of section 482; its sponsors in the House of Representatives
described it as an effort to "Improve [the] enforceability of
section 482". H. Rept. 101-247, at 1295 (1989). The IRS had
experienced difficulties obtaining information from foreign
parents of U.S. corporations. See United States v. Toyota Motor
Corp., 561 F. Supp. 354 (C.D. Cal. 1983). The noncompliance
penalty of section 6038A(e)(3) is among the principal enforcement
mechanisms of the statute.
Section 6038A(e)(3) provides:
(3) APPLICABLE RULES IN CASES OF NONCOMPLIANCE.--
If the rules of this paragraph apply to any
transaction--
(A) the amount of the deduction allowed under
subtitle A for any amount paid or incurred by the
reporting corporation to the related party in
connection with such transaction, and
(B) the cost to the reporting corporation of
any property acquired in such transaction from the
related party (or transferred by such corporation
in such transaction to the related party),
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