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50 percent of the voting power of all classes of its stock (the
voting power test), sec. 957(a)(1), or if U.S. shareholders own
more than 50 percent of the total value of its stock (the stock
value test), sec. 957(a)(2).10
Burndy-US owned 50 percent of the stock of Burndy-Japan in
1992. For petitioners to prevail, they must show that, in 1992,
either the voting power of Burndy-Japan stock held by Burndy-US
exceeded 50 percent of the total combined voting power of Burndy-
Japan stock, or the value of Burndy-Japan stock held by Burndy-US
exceeded 50 percent of the total value of Burndy-Japan stock.
Petitioners contend that Burndy-US met both tests. We disagree
for the following reasons.
10 Sec. 957(a) provides:
SEC. 957(a). General Rule.--For purposes of this
subpart, the term "controlled foreign corporation"
means any foreign corporation if more than 50 percent
of--
(1) the total combined voting power of
all classes of stock of such corporation
entitled to vote, or
(2) the total value of the stock of such
corporation,
is owned (within the meaning of section 958(a)), or is
considered as owned by applying the rules of ownership
of section 958(b), by United States shareholders on any
day during the taxable year of such foreign
corporation.
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