International Multifoods Corporation and Affiliated Companies - Page 1

                                   108 T.C. No. 26                                    

                               UNITED STATES TAX COURT                                

             Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent               

               Docket No. 11643-92.                Filed June 18, 1997.               

               On Mar. 30, 1987, P, a domestic corporation,                           
               entered into an agreement with Borden to sell P's stock                
               in Paty, a limitada organized under the laws of the                    
               Federal Republic of Brazil.  P realized a loss upon the                
               sale of the Paty stock, which P reported as a U.S.                     
               source loss for purposes of its foreign tax credit                     
               computation under sec. 904(a), I.R.C.  R determined                    
               that the loss was foreign source.                                      
               Held:  P's loss is sourced in the United States.                       
               Sec. 865, I.R.C., which provides that income from the                  
               sale of noninventory personal property is generally                    
               sourced at the residence of the seller, is also                        
               generally applicable in sourcing losses realized on the                
               sale of such property.                                                 

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