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2(e)(3)(ii) through (iv), Income Tax Regs., with the
result that D’s gain on that sale does not constitute
Subpart F (foreign personal holding company) income to
P pursuant to sec. 954(c)(1)(B)(iii), I.R.C.
Rauenhorst v. Commissioner, 119 T.C. 157 (2002),
applied.
Robert D. Whoriskey, George Pompetzki, Eduardo A.
Cukier, and Linda Galler, for petitioner.
Lyle B. Press, for respondent.
OPINION
HALPERN, Judge: Dover Corporation (petitioner) is the
common parent of an affiliated group of corporations making a
consolidated return of income (the group or affiliated group).
By notice of deficiency dated September 14, 2000 (the notice),
respondent determined deficiencies in Federal income tax for the
group for its 1996 and 1997 taxable (calendar) years in the
amounts of $9,329,596 and $24,422,581, respectively. All but one
of the adjustments that gave rise to those determinations have
been settled, and this report addresses the sole remaining issue,
which involves an interaction between the so-called check-the-box
regulations and the definition of foreign personal holding
company income (FPHCI); viz, whether the deemed sale of assets
immediately following their deemed receipt (pursuant to the
check-the-box regulations) from a disregarded foreign entity
gives rise to FPHCI.
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