Payless Cashways, Inc. and Its Subsidiaries - Page 9

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                         (B) such lessee is obligated to lease                        
                    the building under an agreement to lease                          
                    entered into before September 26, 1985, and                       
                    such property is provided for such building,                      
                         (C) such buildings are to serve as world                     
                    headquarters of the lessee and its                                
               For purposes of this paragraph, a corporation is an                    
               affiliate of another corporation if both corporations                  
               are members of a controlled group of corporations                      
               within the meaning of section 1563(a) of the Internal                  
               Revenue Code of 1954 without regard to section                         
               1563(b)(2) of such Code.  Such lessee shall include a                  
               securities firm that meets the requirements of                         
               subparagraph (A), except the lessee is obligated to                    
               lease the building under a lease entered into on June                  
               18, 1986.                                                              
          This exception is commonly referred to as the world headquarters            
          rule.  The requirements of the world headquarters rule are                  
          cumulative.  Payless must prove that it meets all the                       
          requirements of subparagraphs (A), (B), and (C) in order to                 
          qualify for an investment tax credit under this transitional                
          rule.  See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115               
               Respondent argues that Payless fails to meet the                       
          requirements of the world headquarters rule because:  (1) Payless           
          did not lease the entire building at Two Pershing Square, and (2)           
          Payless’ headquarters at Two Pershing Square was not a “world               
               TRA section 204(a)(7) contains no explicit requirement that            

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