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assess tax against petitioner with respect to any issue. The first
unrestricted consent, executed on October 7, 1994, extended the
limitations period until June 30, 1995; the second unrestricted
consent, executed on May 8, 1995, extended the limitations period
until December 31, 1995; and the third unrestricted consent,
executed on November 9, 1995, extended the limitations period until
March 15, 1996.
On January 11, 1996, both petitioner and MS-Puerto Rico
executed restricted consents to extend the limitations period for
the 1990 and 1991 tax years to December 31, 1996. The restricted
consent executed by petitioner read, in pertinent part, as follows:
RESTRICTIVE LANGUAGE
The amount of any deficiency assessment is to be
limited to that resulting from the following two
potential adjustments, including any consequential
changes to other items based on such adjustments:
(1) The Service's proposed adjustment relating to
the disallowance of Microsoft's use of the profit split
method of computing taxable income for purposes of
section 936(h) of the Internal Revenue Code of 1986 with
respect to its transactions with Microsoft Puerto Rico
and any transfer pricing adjustments resulting from such
disallowance; and
(2) The Service's proposed adjustments relating to
the taxpayer's treatment of subsidiary and OEM royalties,
respectively, as income from qualifying export property
for FSC purposes pursuant to section 927(a) of the
Internal Revenue Code of 1986.
The restricted consent executed by MS-Puerto Rico contained
nearly identical restrictive language to that of petitioner's, but
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