118 T.C. No. 15
UNITED STATES TAX COURT
SQUARE D COMPANY AND SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6067-97. Filed March 27, 2002.
P, an accrual method taxpayer, is a U.S. corp. and
subs. wholly owned by S, a foreign corp. P accrued but
did not pay interest owed to S and another related
foreign person during 1991 and 1992 and claimed
deductions of such accrued interest in those years. R
disallowed any deduction in a year prior to the year
the interest was actually paid and relies on sec.
1.267(a)-3, Income Tax Regs., in support of his
position.
Held, the instant case raises the identical issue
decided in Tate & Lyle, Inc. v. Commissioner, 103 T.C.
656 (1994), revd. and remanded 87 F.3d 99 (3d Cir.
1996), of whether sec. 1.267(a)-3, Income Tax Regs., is
a valid exercise of the regulatory authority granted in
sec. 267(a)(3), I.R.C. In light of the reversal by the
Court of Appeals for the Third Circuit, we reconsider
our holding.
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