American Air Liquide, Inc. and Subsidiaries - Page 8

                                        - 8 -                                         
          promulgated new final regulations which omitted the reserved                
          paragraph.  The preamble to the new final regulations states that           
          the Commissioner had decided not to adopt rules which look                  
          through payments from foreign parents to U.S. subsidiaries                  
          because of administrative and policy concerns.  The preamble                
               To apply the look-through rules, the Service needs                     
               complete information concerning the foreign                            
               corporation’s income and expenses.  The Service may not                
               be able to obtain all of the necessary information from                
               a foreign parent corporation and to audit it.  In                      
               addition, the payments generally would be deductible                   
               from taxable income of the payor that is entirely                      
               outside the jurisdiction of the United States                          
               (including subpart F) and, therefore, do not give rise                 
               to the same concerns involved in other look-through                    
               cases. [T.D. 8412, 1992-1 C.B. 273 (preamble to the                    
               1992 final regulations).]                                              
               Petitioner further relies on the U.S.-France Treaty and more           
          specifically the nondiscrimination provision embodied in Article            
          24(3), which provides:                                                      
               A corporation of a Contracting State, the capital of                   
               which is wholly or partly owned or controlled, directly                
               or indirectly, by one or more residents of the other                   
               Contracting State, shall not be subjected in the first-                
               mentioned Contracting State to any taxation or any                     
               requirement connected therewith which is other or more                 
               burdensome than the taxation and connected requirements                
               to which a corporation of that first-mentioned                         
               Contracting State carrying on the same activities, the                 
               capital of which is wholly owned by one or more                        
               residents of that first-mentioned State, is or may be                  
               Unless there is a reason to disregard the general rule of              
          section 904(d), petitioner’s royalties from L’Air should be                 

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011