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Re: Federal Income Tax Deficiencies:
Year Deficiency
1992 $74,225
1993 94,903
Re: Deficiencies For Withholding of Income Tax At Source and
Additions to Tax:
Withholding Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6656
1992 $53,608 $13,402 $5,361
1993 107,107 26,777 10,711
All section references are to the Internal Revenue Code (the
Code) in effect for the years in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
Following a concession by each party, we must decide whether
petitioner, a U.S. corporation that owned and operated a cattle-
crossing facility on the United States (U.S.) side of the U.S.-
Mexican border, is entitled to deduct amounts paid to its Mexican
parent company in 1992 and 1993 with respect to costs incurred by
the parent company for inspection and bathing of cattle crossing
the border. If we conclude that the amounts are not deductible,
then we must decide (1) whether petitioner’s payments to its parent
company constitute dividend payments, for which petitioner was
required to withhold 30 percent pursuant to section 1442; (2)
whether petitioner was required to file Federal withholding tax
returns, Forms 1042, Annual Withholding Tax Return for U.S. Source
Income of Foreign Persons, for 1992 and 1993; and (3) whether
petitioner is liable for additions to tax pursuant to sections
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Last modified: May 25, 2011