The Limited, Inc., and Consolidated Subsidiaries - Page 15

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          I.  Introduction                                                            
               World Financial Network National Bank (WFNNB), a national              
          banking association, is a wholly owned subsidiary of petitioner.            
          In 1989, WFNNB was organized (and today operates) as a credit               
          card bank to issue credit cards to customers of petitioner’s                
          stores.  Mast Industries (Far East), Ltd. (MFE), a Hong Kong                
          corporation, also is a wholly owned subsidiary of petitioner.               
          MFE is a controlled foreign corporation within the meaning of               
          section 957 and, with respect to MFE, petitioner is a U.S.                  
          shareholder within the meaning of section 951(b).  MFE                      
          (Netherlands Antilles) N.V. (MFE N.V.), a Netherlands Antilles              
          corporation, is a wholly owned subsidiary of MFE.  On January 28,           
          1993, MFE N.V. purchased eight certificates of deposit (CDs) from           
          WFNNB in the total amount of $174.9 million (the MFE N.V. CDs).             
          We must determine whether, as a result of those purchases,                  
          petitioner must include $174,127,665 in gross income under                  
          section 951(a)(1)(B) on account of the investment by MFE of its             
          earnings in U.S. property.6  See sec. 956.                                  

          6    The record does not explain the discrepancy between the                
          $174.9 million purchase price and the $174,127,665 adjustment to            
          gross income.                                                               

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