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of the controlled foreign corporation have less than 25-percent
control of the domestic corporation.
E. Analysis
1. The Banking Business
The repatriation provision was enacted in 1962 on the theory
that the repatriation of previously untaxed (by the United
States) earnings by a controlled foreign corporation was
substantially the equivalent of a dividend being paid to the U.S.
shareholders of that corporation (dividend equivalency theory).
Excepted were a group of transactions that the tax writing
committees believed were “normal commercial transactions without
intention to permit funds to remain in the United States
indefinitely”. S. Rept. 1881, supra, 1962-3 C.B. at 794; accord
H. Rept. 1447, supra, 1962-3 C.B. at 469. One such exception is
for “deposits with persons carrying on the banking business”.
The phrase “carrying on the banking business” is a phrase
modifying (and, thus, describing or limiting) the noun “persons”.
The phrase expresses an action required of such persons. That
action is to carry on “the banking business”. Congress' use of
the definite article “the” to modify the subordinate term
“banking business” indicates a purpose to particularize the
activity or activities required of such persons. Such persons
must do something in particular: They must carry on (i.e.,
conduct) a business. Not any business, but the banking business;
not a banking business (which would suggest a variety of
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