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to do so. Under the Japanese Commercial Code, any shareholder
may ask a court to order dissolution if the shareholders
deadlock. Burndy-US could cause a deadlock, but that would not
necessarily cause a dissolution because a Japanese court could
fashion an alternative remedy. Thus, Burndy-US lacked unilateral
power to force Burndy-Japan to dissolve.16
e. Financial Accounting and Underwood’s Testimony
Generally, for financial accounting purposes, parent
companies and subsidiaries in which the parent owns a controlling
interest may consolidate financial statements. Accounting
Research Bulletin (ARB) No. 51, Consolidated Financial Statements
(August 1959). Burndy-US and Burndy-Japan did not consolidate
their financial statements before 1993. A parent usually owns a
controlling interest if the parent owns a majority voting
interest. ARB 51, par. 2. Petitioners first treated Burndy-
Japan as a CFC for income tax purposes in 1987, following
enactment of a tax law change relating to foreign tax credits
which made it advantageous to do so. See TRA 1986 sec.
1222(a)(1), 100 Stat. 2556. Burndy-US’s ownership interest in
Burndy-Japan did not change between 1973 and 1993. However, in
deciding whether Burndy-US controlled Burndy-Japan in 1992, we do
16 Petitioners’ argument strains credulity because Burndy-
US did not want to dissolve Burndy-Japan. York testified that
dissolution of Burndy-Japan would be apocalyptic for Burndy-US.
Burndy-US never discussed dissolving Burndy-Japan with Furukawa
or Sumitomo.
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