Swallows Holding, Ltd. - Page 1

                                   126 T.C. No. 6                                     

                               UNITED STATES TAX COURT                                

          SWALLOWS HOLDING, LTD., Petitioner v.                                       
          COMMISSIONER OF INTERNAL REVENUE, Respondent                                

               Docket No. 8045-02.              Filed January 26, 2006.               

                    P is a foreign corporation whose only substantial                 
               asset is unimproved land in the United States.  On its                 
               1994, 1995, and 1996 Federal income tax returns, P                     
               recognized rent and option income and claimed                          
               deductions for taxes and licenses, the result of which                 
               was a reported loss for each year.  P filed each return                
               after its due date, but before any contact from R.  R                  
               determined that sec. 882(c)(2), I.R.C., precluded P                    
               from deducting its expenses because it filed its                       
               returns untimely.  In Anglo-Am. Direct Tea Trading Co.                 
               v. Commissioner, 38 B.T.A. 711 (1938), a setting                       
               similar to that here, the Board held that sec. 233 of                  
               the Revenue Act of 1928, ch. 852, 45 Stat. 849, and the                
               Revenue Act of 1932, ch. 209, 47 Stat. 230, an almost                  
               verbatim predecessor to sec. 882(c)(2), I.R.C., did not                
               include a timely filing requirement and rejected R’s                   
               contrary interpretation.  Subsequently, the Court of                   
               Appeals for the Fourth Circuit construed like                          
               predecessor text similarly, also in rejection of R’s                   
               contrary interpretation.  See Blenheim Co. v.                          

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