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Held, further, the two-part test of Chevron
U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837 (1984), applied. Under the first part of the
Chevron test, sec. 267(a)(3), I.R.C., authorizing
regulations applying the “matching principle” of sec.
267(a)(2), I.R.C., to foreign persons, is not clear and
unambiguous. Under the second part of the Chevron
test, sec. 1.267(a)-3, Income Tax Regs., is a
permissible construction of, and not manifestly
contrary to, sec. 267(a)(3), I.R.C. To the extent our
opinion in Tate & Lyle is inconsistent with this
holding, we will no longer follow it.
Held, further, sec. 1.267(a)-3, Income Tax Regs.,
does not violate Article 24(3) of the Convention With
Respect to Taxes on Income and Property, July 28, 1967,
U.S.-Fr., 19 U.S.T. 5281, 5310.
Robert H. Aland, Gregg D. Lemein, John D. McDonald, and
Holly K. McClellan, for petitioner.
Lawrence C. Letkewicz and Dana E. Hundrieser, for
respondent.
OPINION
GALE, Judge: Respondent determined deficiencies in
petitioner’s Federal income taxes of $7,420,227, $28,971,522, and
$15,285,996, for taxable years 1990, 1991, and 1992,
respectively. Petitioner claims overpayments of $12,486,577 and
$18,289 for taxable years 1990 and 1992, respectively. We must
decide whether petitioner, an accrual method taxpayer, may deduct
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