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reporting corporation at the time the two conduct a transaction,
refuses to authorize the reporting corporation to act as its
agent. In that situation, the reporting corporation "would
generally be subject to the disallowance rule [noncompliance
penalty] with respect to transactions" with the related party
taking place prior to the time the reporting corporation became
aware that section 6038A would apply. See H. Rept. 101-247, at
1299 (1989). Although this result could be called "harsh", the
House report anticipated that no exception would be made unless,
among other conditions, the reporting corporation did not know or
have reason to know that it was conducting transactions with a
related party. Id. There is no evidence, and petitioner does
not argue, that it did not know that it was engaged in
transactions with its sole shareholder during petitioner's 1991
tax year. We reject petitioner's argument that section 6038A
should not apply because petitioner allegedly was unable to
compel its onetime sole shareholder to authorize petitioner as
its agent for purposes of section 6038A.
We deal next with petitioner's "successor in interest"
argument. The term "successor in interest" is not defined in
section 6038A or its regulations. Petitioner argues that
Worltek, a domestic corporation, is a successor in interest to
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