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regulation, promulgated pursuant to a specific grant of authority
in section 267(a)(3). That provision makes the authorization
with reference to section 267(a)(2). The provisions state:
SEC. 267(a). In General.--
* * * * * * *
(2) Matching of deduction and payee income item in
the case of expenses and interest.–-If–-
(A) by reason of the method of
accounting of the person to whom the payment
is to be made, the amount thereof is not
(unless paid) includible in the gross income
of such person, and
(B) at the close of the taxable year of
the taxpayer for which (but for this
paragraph) the amount would be deductible
under this chapter, both the taxpayer and the
person to whom the payment is to be made are
persons specified in any of the paragraphs of
subsection (b),
then any deduction allowable under this chapter in
respect of such amount shall be allowable as of the day
as of which such amount is includible in the gross
income of the person to whom the payment is made (or,
if later, as of the day on which it would be so
allowable but for this paragraph). * * *
(3) Payments to foreign persons. The Secretary
shall by regulations apply the matching principle of
paragraph (2) in cases in which the person to whom the
payment is to be made is not a United States person.
Thus, section 267(a)(2) provides in general that in the case of
amounts owed to certain related persons (specified in section
267(b)), if the person to whom the amount is owed, as a result of
that person’s accounting method, need not include the amount in
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Last modified: May 25, 2011