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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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