- 35 -
petitioner's argument that the phrase "deposits with persons
carrying on the banking business" has a plain meaning (an
argument we reject), we note that, when the adherence to the
"plain meaning" of a statute produces an unreasonable result
"plainly at variance with the policy of the legislation as a
whole", it is proper to follow that purpose, rather than the
literal words. United States v. Am. Trucking Associations, Inc.,
310 U.S. 534, 543-544 (1940)(internal quotation omitted); see
also United States v. Ron Pair Enter., 489 U.S. 235, 242 (1989).
Further, "[w]e may then look to the reason of the enactment and
inquire into its antecedent history and give it effect in
accordance with its decision and purpose, sacrificing, if
necessary, the literal meaning in order that the purpose may not
fail." U.S. Padding Corp. v. Commissioner, 88 T.C. at 184
(quoting Ozawa v. United States, 260 U.S. 178, 194 (1922)). We
believe that a related party prohibition is implicit in the
exception for section 956 deposits. Such a prohibition is
necessary to give effect to the dividend equivalence theory that
underlies the repatriation provision.13 If we find that the
13 Petitioner argues that a limitation of the sec. 956 deposits
exception to unrelated-party deposits would render that exception
"superfluous" in light of sec. 956(b)(2)(F). According to
petitioner, because sec. 956(b)(2)(F) permits a controlled
foreign corporation's earnings to escape U.S. taxation when
invested in the obligations of an unrelated U.S. corporation, it
would serve no purpose to interpret the sec. 956 deposits
(continued...)
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