- 7 -
In 1993, Payless agreed to an incorporated joint venture
with Grupo Industrial Alfa, S.A. de C.V. (Alfa), a Mexican
company. Alfa and Payless agreed to establish and operate stores
selling home improvement products in Mexico. On October 18,
1993, Payless and Alfa executed a shareholders agreement that
initiated the Mexican business venture. In the shareholders
agreement, Payless and Alfa agreed to capitalize Payless de
Mexico, S.A. de C.V. (Payless de Mexico) to distribute and sell
building materials and home improvement products in Mexico.
Payless held a 49-percent interest in Payless de Mexico. Payless
de Mexico planned to build a chain of 25 stores in Mexico. In a
supply agreement dated October 18, 1993, Payless agreed to supply
Payless de Mexico with merchandise and products from its
distribution centers. On December 12, 1994, Payless de Mexico
opened its first store in Monterey, Mexico. In 1995, Payless
sold its interest in Payless de Mexico to Versax, S.A. de C.V., a
subsidiary of Alfa.
OPINION
Before 1986, taxpayers who acquired certain machinery and
equipment for use in a trade or business were allowed an
investment tax credit (ITC) against income tax liability in an
amount equal to a percentage of the cost of the “qualified
property”. Secs. 38, 46, 48. TRA section 211, 100 Stat. 2166,
generally repealed the investment tax credit for property placed
Page: 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