The Limited, Inc., and Consolidated Subsidiaries - Page 34

                                       - 34 -                                         

          Congress had recognized that the repatriation provisions had                
          discouraged investments that would be favorable to the U.S.                 
          balance of payments.  Congress addressed that problem by adding             
          two additional exceptions to the definition of U.S. property:               
          subparagraphs (F) (certain stock or debt investments) and                   
          (G) (certain oil drilling rigs).  The subparagraph (F) exception            
          is limited to stock or debt of unrelated domestic corporations.             
          The Committee on Finance cautioned that it did not wish the law             
          to be changed to permit the U.S. shareholders of a controlled               
          foreign corporation to use the earnings of the corporation                  
          without payment of tax.  H. Rept. 94-658, supra.  S. Rept. 94-              
          938, supra.  Congress did not amend the section 956 deposit                 
          exception to except only deposits with unrelated persons.  That             
          is understandable, however, since BHCA prohibited nonbank holding           
          companies from owning banks.12  Petitioner has offered no policy            
          reason why Congress would permit deposits (particularly deposits            
          for an indefinite period) with a related bank but prohibit                  
          investments in a related corporation.  In response to                       

          Federal banking laws going back to the 1930's and the Bank                  
          Holding Company Act of 1956.”)                                              
          12   Undoubtedly, Congress believed that it had foreclosed that             
          possibility in 1970 when it enacted BHCA 1970 Amendments.  See              
          supra note 11.  By 1987, nonbank companies had found a loophole             
          (the nonbank loophole) in BHCA, which Congress enacted CEBA to              
          close.  See supra note 3.  Commercial firms, however, did not               
          begin to exploit the nonbank loophole until the early 1980s.                

Page:  Previous  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  Next

Last modified: May 25, 2011