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As shown in the appendix, the parties have stipulated
two sets of gross income ratios for 1986, one set to be
used assuming that netting is not permitted and the other
set to be used assuming that netting is permitted. The
amount of a member's interest expense to be apportioned to
sources without the United States is computed, if netting
is not permitted, by multiplying the first gross income
ratio and the member's gross interest expense, or, if
netting is permitted, by multiplying the second ratio
and the member's net interest expense. The appendix has
two schedules for 1986, one schedule summarizing the
apportionment of gross interest (i.e., no netting) and
one summarizing the apportionment of net interest (i.e.,
netting).
It appears that in computing the second set of gross
income ratios for 1986, the ratios to be used if netting
is permitted, the parties have adjusted the gross income of
each member by subtracting therefrom the amount of interest
income that is offset by interest expense. For example, in
the case of Kee Leasing Co., the first income ratio of
12.94 percent, the ratio to be used in apportioning
interest if netting is not permitted, was computed by
dividing the company's gross income from sources without
the United States, $260,455, by the company's gross income,
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