- 10 - You have not established that you qualify to elect the profit split method under Internal Revenue Code Section 936(h) and the Income Tax Regulations thereunder. Accordingly, your taxable income has been increased in the amounts of $1,366,918.00 and $43,771,224.00 for the taxable periods ending June 30, 1990, and June 30, 1991, respectively. After disallowing the profit-split method election, respondent recomputed petitioner's combined taxable income deduction to be $7,504,434 (rather than $51,275,658) by redetermining MS-Puerto Rico's taxable income for 1991 pursuant to section 936(h)(1)-(4) (the methods used for determining taxable income when the profit- split method is not properly elected) and section 482 (the transfer pricing rules). Filing of the Petition and Answers On August 5, 1996, petitioner filed a petition contesting respondent's determinations that MS-Puerto Rico was not qualified to elect the profit-split method. Respondent filed an answer to the petition on October 8, 1996, denying any error with respect to the determination that MS-Puerto Rico was not qualified to elect the profit-split method. In the answer, respondent admitted that the basis for the disallowance of the combined taxable income deduction was MS-Puerto Rico's failure to satisfy the significant business presence test. On January 22, 1997, respondent filed a Motion for Leave to Amend Answer. In the motion, respondent sought to raise thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011