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of 1939”. Id. at 524. The Court of Appeals summarized the
relevant facts as follows, id. at 523:
[D] had its own invoices, letterheads, and employer
social security number; it maintained separate books of
account and it maintained its bank account at a bank
different from that used by [B]; it underwent a separate
annual audit by certified public accountants and it filed
separate corporate income tax returns. And it had officers
and directors differing from those of [B]; its officers and
directors did, however, hold official positions with either
[B] or [A].
[D] paid one employee, Mr. Nielson, directly. Mr.
Nielson was responsible for [D’s] administrative work. The
work consisted of maintaining [D’s] books and records;
reviewing all paper work done by the personnel of [B] who
had been assigned to assist him; preparing export
declarations and customs papers; handling correspondence;
and coordinating instructions received from [C] with [B’s]
traffic, production, and shipping departments. During its
first year of operations, [D] paid [B] $100 a month for the
assistance and facilities provided by [B]; after the first
year was completed, a study was made and [D’s] monthly
payment to [B] was increased to $200.
After 1952 [D] paid Dr. William Cooper a fee to study
the possibility of expanding [D’s] business in the Canadian
market.
The Court of Appeals ruled that these facts were sufficient
to constitute the active conduct of a trade or business by D,
even though the employees of B, the parent corporation, performed
all the work other than that performed by D’s one employee. Id.
at 526-527. The taxpayer qualified for WHTC treatment.
In Babson Brothers Export Co. v. Commissioner, supra, we
quoted extensively from the opinion in Frank v. International
Canadian Corp., supra, and relied on the latter opinion’s
conclusions to hold that the taxpayer in Babson Brothers Export
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