- 2 - 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 deficiencyPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011