Union Carbide Corporation and Subsidiaries - Page 3

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          Tax Regs., 52 Fed. Reg. 6448 (Mar. 3, 1987) (Regulation), with               
          respect to export sales made during its taxable years 1987                   
          through 1989, in connection with petitioner's claims for refunds             
          for overpayment of taxes for those years under section 6511; and,            
          if not, (2) whether the Regulation is valid.                                 
               Petitioner's principal offices were located in Danbury,                 
          Connecticut, at the time the petition was filed.                             
                                      Background                                       
               The facts related below are derived from the Stipulation of             
          Facts, Foreign Sales Corporation Issue, filed on August 8, 1997,             
          and attached exhibits.  The facts are stated solely for purposes             
          of deciding the matter before us and are not findings of fact in             
          the event of a trial of this case.  See Coca-Cola Co. & Subs. v.             
          Commissioner, 106 T.C. 1, 2 (1996).                                          
               During the years at issue, petitioner manufactured or                   
          produced various chemicals, plastics, carbon products, and                   
          industrial gases in the United States.  Petitioner sold a portion            
          of its products to customers outside the United States.                      
               On December 31, 1984, petitioner organized Union Carbide                
          Foreign Sales Corporation (UCFSC) under the laws of the U.S.                 
          Virgin Islands.  UCFSC elected to be taxed as an FSC pursuant to             
          section 922(a)(2) on March 13, 1985.  UCFSC operated and                     
          qualified as an FSC throughout the relevant period.                          
               Under an Export Distribution and Commission Agreement                   
          (Agreement) dated December 28, 1984, petitioner paid UCFSC during            




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