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(iii) Qualified activity.--For purposes of this
paragraph, the term "qualified activity" means any
activity giving rise to--
(I) foreign base company shipping income,
(II) foreign base company oil related income,
(III) foreign base company sales income,
(IV) foreign base company services income,
(V) in the case of a qualified insurance
company, insurance income or foreign personal
holding company income, or
(VI) in the case of a qualified financial
institution, foreign personal holding company
income.
In summary, as the TAMRA chain deficit rule applies for
1990, subpart F income of profitable CFC's may only be reduced by
deficits in earnings and profits of unprofitable CFC's if each of
the CFC's is part of a "qualified chain" and if the subpart F
income of the profitable CFC's and the deficits in the earnings
and profits of the unprofitable CFC's relate to the same
qualified activity.
We first address the legal issue of whether Guardian Bank
and Guardian Services, as brother/sister corporations, qualify
under the TAMRA chain deficit rule as members of the same
qualified chain. Respondent contends that Guardian Bank and
Guardian Services do not qualify as qualified chain members
because petitioner's ownership interest in Guardian Bank and
Guardian Services runs through a common parent corporation
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