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Petitioners contend that they derived no U.S. tax benefit by
not treating Burndy-Japan as a CFC before 1987. However, their
representations regarding the pre-1987 years are incomplete and
unconvincing. They deny having Subpart F income for the years
1987 through 1992, and they ask us to infer that they had little
or no Subpart F income from 1983 to 1986. They cite nothing in
the record relating to 1983 through 1986 to support their
contention, and they made no reference to the years before 1983.
The taxpayer bears the burden of proving that it lacks a tax
avoidance motive. Hoffman Motors Corp. v. United States, 473
F.2d 254 (2d Cir. 1973). We are not persuaded that petitioners
derived no U.S. tax benefit from not treating Burndy-Japan as a
CFC before 1987.
A taxpayer may be permitted to invoke the doctrine of
substance over form if the motive of the taxpayer is not
primarily tax avoidance. Hoffman Motors Corp. v. United States,
supra at 257. Petitioners’ reversal of position regarding
whether Burndy-Japan was a CFC was tax motivated. Petitioners
may not invoke the doctrine of substance over form here, and we
need not consider petitioners’ contention that Burndy-US, in
substance, controlled Burndy-Japan in deciding whether Burndy-US
owned more than 50 percent of the voting power of Burndy-Japan.
See Hoffman Motors Corp. v. United States, supra.
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