- 4 -
Withholding
Income tax Sec. 66621 tax
Year deficiency penalty deficiency
1991 $1,733,207 $380,298
1992 753,456 256,626
1993 24,892,344 4,978,469 $2,700,316
1 Unless otherwise specified, section references are to the
Internal Revenue Code in effect in the years in issue, and Rule
references are to the Tax Court Rules of Practice and Procedure.
After concessions, we must decide:
1. Whether Burndy-Japan Ltd. (Burndy-Japan) was a
controlled foreign corporation (CFC) of Burndy Corp. (Burndy-US)1
in 1992. We hold that it was not because Burndy-US did not own
more than 50 percent of the voting power of Burndy-Japan stock or
more than 50 percent of the value of Burndy-Japan stock in 1992.
2. Whether transfers from Burndy-US and Framatome
Connectors USA, Inc. (Framatome US), now known as Framatome
Connectors USA Holding, Inc., to Framatome Connectors
International (FCI), their parent corporation, of assets worth
more than the assets that Burndy-US received from FCI were
constructive dividends subject to withholding tax under section
1442. We hold that they were to the extent described below.
1 References to Burndy Corp. (Burndy-US) include its
successors in interest, such as Framatome Connectors USA, Inc.,
and Framatome Connectors USA Holding, Inc.
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