Falstone, Inc. - Page 7




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          a corporate taxpayer that was an inhabitant of the USVI.  On                
          August 14, 1984, the taxpayer filed its Federal income tax return           
          with the BIR for its taxable year which ended on May 31, 1984.              
          See id. at 208.  On September 8, 1987, the IRS mailed a notice of           
          deficiency to the taxpayer.  See id.  In Condor Intl., we held              
          that the notice of deficiency was timely because the taxpayer's             
          taxable year that ended on May 31, 1984, was a "pre-1987 open               
          year" within the meaning of section 1277(c)(2)(C) of TRA 1986.              
          See id. at 217.  Additionally, we held that sections 1275(b) and            
          1277(c)(2) of TRA 1986 do not retroactively tax USVI inhabitants            
          because the amount of tax owed by any taxpayer is not altered.              
          See id. at 218.  In reaching that conclusion, we held that, prior           
          to the enactment of TRA 1986, an inhabitant of the USVI would be            
          required to pay tax on its worldwide income to the BIR.  See id.;           
          accord Danbury, Inc. v. Olive, 820 F.2d 618, 626 n.4 (3d Cir.               
          1987).  We also held that there was no violation of the Due                 
          Process Clause of the Fifth Amendment to the Constitution because           
          the only difference between taxpayers that were specifically                
          exempted from the application of section 1275(b) of TRA 1986 by             
          section 1277(c)(2) of TRA 1986 and taxpayers that were not so               
          exempted was the agency to which each taxpayer was required to              
          pay tax.  See Condor Intl., Inc. v. Commissioner, supra at 218.             
          In reaching that conclusion, we relied on the case of Bizcap,               
          Inc. v. Olive, 892 F.2d at 1167, in which the Court of Appeals              






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