The Limited, Inc., and Consolidated Subsidiaries - Page 35




                                       - 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...)           




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