Dover Corporation and Subsidiaries - Page 9

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               portion of the gross income which consists of:                         
                           *    *    *    *    *    *    *                            
                         (B) Certain property transactions.--The                      
                    excess of gains over losses from the sale or                      
                    exchange of property--                                            
                         *    *    *    *    *    *    *                              
                         (iii) which does not give rise to any income.                
               B.  The Regulations                                                    
                    1.  Regulations Under Section 954(c)(1)(B)(iii)                   
               In pertinent part, section 1.954-2(e)(3), Income Tax Regs.,            
          which defines “property that does not give rise to income”,                 
          provides:                                                                   
                    (3) Property that does not give rise to income.                   
               Except as otherwise provided in this paragraph (e)(3),                 
               for purposes of this section, the term property that                   
               does not give rise to income includes all rights and                   
               interests in property (whether or not a capital asset)                 
               including, for example, forwards, futures and options.                 
               Property that does not give rise to income shall not                   
               include--                                                              
                         *    *    *    *    *    *    *                              
                         (ii) Tangible property (other than real                      
                    property) used or held for use in the                             
                    controlled foreign corporation’s trade or                         
                    business that is of a character that would be                     
                    subject to the allowance for depreciation                         
                    under section 167 or 168 and the regulations                      
                    under those sections (including tangible                          
                    property described in section 1.167(a)-2);                        
                         (iii) Real property that does not give                       
                    rise to rental or similar income, to the                          
                    extent used or held for use in the controlled                     
                    foreign corporation’s trade or business;                          







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