Chicago Mercantile Exchange - Page 4




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          petitioner maintained the first office in London, England, with a           
          staff of 3 to 5 employees, including one of petitioner’s vice               
          presidents as managing director.  From 1987 through 1990,                   
          petitioner maintained the second office in Tokyo, Japan, with a             
          staff of 3 or 4 employees, including a managing director who                
          became a vice president of petitioner in 1988.  Petitioner                  
          maintained the other two offices in New York, New York, and                 
          Washington, D.C., with a staff of 2 to 5 employees and 4 to 6               
          employees, respectively.  The New York office also was managed by           
          one of petitioner’s vice presidents.                                        
               In December 1988, petitioner formed a second limited                   
          partnership named P-M-T Limited Partnership (PMT).  Petitioner is           
          a 10-percent general partner in PMT, and petitioner’s members and           
          clearing house members collectively own the remaining 90-percent            
          interest as limited partners.  PMT was formed to create and                 
          license a global electronic system for trading futures and                  
          options on futures contracts during the non-trading hours of                
          petitioner’s commodity exchange.                                            
                                     Discussion                                       
               Before 1986, taxpayers who acquired certain machinery and              
          equipment for use in a trade or business were allowed an                    
          investment tax credit against their income tax liability in an              
          amount equal to a percentage of the cost of the qualified                   
          property.  Secs. 38, 46, 48.  TRA section 211, 100 Stat. 2166,              






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