Sunoco, Inc. and Subsidiaries - Page 20




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             $2,013,345.  On the other hand, the second income ratio of               
             13 percent, the ratio to be used in apportioning interest                
             if netting is permitted, was computed after the amount of                
             netted interest income, $9,844, was subtracted from the                  
             company's gross income, the denominator of the fraction.                 
             Thus, the second ratio of 13 percent was computed by                     
             dividing $260,455, the company's gross income from sources               
             without the United States, by $2,003,501, the company's                  
             total gross income less the amount of netted interest                    
             ($2,013,345 minus $9,844).                                               
                  Similar adjustments were made to the gross income of                
             each of the other 14 members of petitioner's affiliated                  
             group for purposes of computing the second gross income                  
             ratio; i.e., the ratio to be used in computing the interest              
             expense to be apportioned to sources without the United                  
             States, assuming that netting is permitted.                              
                  Furthermore, in the case of one of the 15 members of                
             petitioner's affiliated group of corporations, North Sea                 
             Sun Oil Co., a similar adjustment was made to the numerator              
             of the fraction that constitutes the gross income ratio.                 
             That is, the interest income earned by that company during               
             1986, $1,784,106, was subtracted from the company's foreign              
             source gross income, $36,394,917, to arrive at $34,610,811,              
             the numerator of the fraction.  That amount was divided                  






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