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credit relies on transition rules contained in TRA
secs. 204(a)(7) (world headquarters rule) and
203(b)(1)(C) (equipped building rule), 100 Stat. 2156,
2144.
Held: In order for a taxpayer to have a “world
headquarters” within the meaning of TRA sec. 204(a)(7),
a taxpayer must have substantial international
operations which are directed from the headquarters.
The existence of employees stationed outside the United
States, exports or foreign source income, liability for
foreign taxes, a foreign permanent establishment, and
having foreign subsidiaries or foreign joint venture
operations are all indicia of international operations.
P did not have any of these indicia in the year in
question. P’s importation of some merchandise for
domestic sale and borrowing from banks and other
lenders who participated in the international capital
markets were not sufficient evidence of substantial
international operations to characterize P’s
headquarters as a “world headquarters” under TRA sec.
204(a)(7).
Held, further: TRA sec. 203(b)(1)(C) (equipped
building rule) requires the taxpayer claiming the
investment tax credit to have a specific written plan
and to have incurred or be committed to more than one-
half of the total cost of the equipped building by Dec.
31, 1985. P failed to establish that it had a specific
written plan, or that it had incurred or committed more
than one-half of the total cost of the equipped
building before Jan. 1, 1986, as required by TRA sec.
203(b)(1)(C).
Frederick Brook Voght, Rhonda Nesmith Crichlow, David F.
Levy, Michael E. Baillif, and Rajiv Madan, for petitioners.
Michael L. Boman, for respondent.
RUWE, Judge: Respondent determined a deficiency in
petitioners’ Federal income tax for their taxable year ending
November 29, 1986, in the amount of $240,298. The deficiency
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