- 53 -
under section 1.861-8(e)(2), Income Tax Regs. In this
connection, we note that our opinion in Bowater, Inc.,
in part, had relied upon the reasoning of a prior opinion
of the U.S. Court of Appeals for the Fifth Circuit
involving the predecessor of the 1977 regulation, Dresser
Indus., Inc. v. Commissioner, 911 F.2d 1128 (5th Cir.
1990), revg. 92 T.C. 1276 (1989). Following our
reconsideration of this issue, we now agree with both the
U.S. Courts of Appeals for the Second and Fifth Circuits
that the subject regulation, section 1.861-8(e)(2), Income
Tax Regs., does not permit the netting of interest income
and interest expense. In light of that, we hereby overrule
our opinion in Bowater, Inc., & Subs. v. Commissioner, 101
T.C. 207 (1993).
For reasons set forth above,
An appropriate order will be
issued granting respondent’s
motion in limine.
Reviewed by the Court.
SWIFT, GERBER, RUWE, COLVIN, HALPERN, BEGHE, CHIECHI,
LARO, FOLEY, VASQUEZ, GALE, and MARVEL, JJ., agree with
this opinion.
WELLS and THORNTON, JJ., did not participate in the
consideration of this opinion.
Page: Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 NextLast modified: May 25, 2011