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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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