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or before June 22, 1984, shall be treated as payments to a
resident of the country in which the applicable CFC is
incorporated.
(B) Exception.--Subparagraph (A) shall not apply to any
applicable CFC which did not meet requirements which are
based on the principles set forth in Revenue Rulings 69-501,
69-377, 70-645, and 73-110.
The parties do not dispute that subparagraph (A) has been
satisfied in this case. Their dispute concerns whether Finance,
an applicable CFC, falls within the exception to relief provided
in subparagraph (B) because of a failure to satisfy requirements
based on the principles of the applicable revenue rulings.
The General Explanation states that the principles of the
revenue rulings listed in DEFRA section 127(g)(3)(B) (hereinafter
listed rulings) “include, among other things, the maintenance of
a specified debt-equity ratio.” General Explanation at 397.
Otherwise, neither the statute nor the legislative history
provides guidance as to the content of the other “principles” or
contains any further gloss on the meaning intended by
14(...continued)
means an obligation of (and payable by) a United States person
that is a related person (within the meaning of sec. 482, I.R.C.
1954) to an “applicable CFC”. DEFRA secs. 127(g)(3)(C)(ii),
121(b)(2)(E) and (F), 98 Stat. 653, 640. An “applicable CFC” for
this purpose means generally any controlled foreign corporation
of which at least 50 percent of all voting power of all stock
entitled to vote is owned by a U.S. shareholder and whose
principal purpose is (1) to issue debt obligations that are sold
exclusively to non-U.S. persons with appropriate precautions
taken that such debt obligations will not be held by U.S. persons
and (2) to lend the proceeds of such debt obligations to its
affiliates. DEFRA secs. 127(g)(3)(C)(i), 98 Stat. 653;
121(b)(2)(D),(G), 98 Stat. 640-641; secs. 957 and 958.
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