Payless Cashways, Inc. and Its Subsidiaries - Page 11

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          contemporary, common meaning.  See Commissioner v. Soliman, 506             
          U.S. 168, 174 (1993); Perrin v. United States, 444 U.S. 37, 42              
          (1979).  In United States v. Kjellstrom, 916 F. Supp. 902 (W.D.             
          Wis. 1996), affd. 100 F.3d 482 (7th Cir. 1996), the District                
          Court rejected an argument that a limited percentage of sales               
          made to foreign customers qualified the taxpayer’s headquarters             
          as a “world headquarters”.                                                  
               We believe that an essential requirement of a “world                   
          headquarters” is that a company have substantial international              
          operations or intend to have such operations in the immediate               
          future.  Having employees outside the United States is one                  
          indicium of international operations.  Other indicia of                     
          international operations might include exports or foreign source            
          income, payment of foreign taxes, or the existence of a foreign             
          permanent establishment such as a subsidiary or joint venture               
          operation in a foreign country.  Payless had no exports or                  
          foreign source income.  Before 1994, Payless owned no stores or             
          other facilities outside the United States and had no employees             
          located outside the United States, except when engaged in short-            
          term travel.                                                                
               Despite having no foreign facilities or employees stationed            
          outside the United States and no sales outside the United States,           
          Payless argues that it has sufficient “international activities”            
          to justify classifying its headquarters as a “world                         

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