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approaches under which it is seeking both to avoid the excess
interest tax under section 884(f)(1)(B) and, in the process, to
avoid bearing the tax burden of another provision of the branch
profit tax regime.
In that connection, petitioner did not make an election
under section 1.884-4T(b)(7), Temporary Income Tax Regs.
(finalized in 1992 as sec. 1.884-4(c)(1), Income Tax Regs.), 53
Fed. Reg. 34054 (Sept. 2, 1988), to treat the accrued interest as
paid in the year of accrual, thereby relieving itself of the
potential for excess interest tax liability.8 The election by a
foreign corporation must be made with its income tax return, its
amended income tax return, or a separate written notice to the
Commissioner of Internal Revenue, none of which was done in this
case. See sec. 1.884-4T(b)(7)(iii), Temporary Income Tax Regs.,
supra (finalized as sec. 1.884-4(c)(1)(iii), Income Tax Regs.).
After respondent's audit began, petitioner filed amended
Forms 1120F for the years under consideration seeking to
eliminate any excess interest by attempting an election to reduce
the affected liabilities under section 1.884-1(e)(3), Income Tax
Regs. Finally, after filing the petition in this case,
8 If petitioner had made that election, it would have been
binding for all years, and petitioner would then have been
subject to a 10-percent withholding obligation under art. 13 of
the U.S.-Japan Income Tax Treaty (the treaty). Convention for
the Avoidance of Double Taxation, Mar. 8, 1971, U.S.-Japan, art.
13, 23 U.S.T. (Part I) 967, 990. Under the treaty, the
withholding under sec. 1442 is reduced from 30 to 10 percent.
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