Swallows Holding, Ltd. - Page 4

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          the earlier section's requirement that a foreign corporation file           
          a true and accurate return “in the manner prescribed in this                
          title” and rejected respondent’s argument that the word “manner”,           
          as it appeared in the quoted text, meant that the foreign                   
          corporation could deduct its expenses only if it filed its                  
          returns timely; i.e., before the time set forth in a predecessor            
          to section 6072.3  Subsequently, the Court of Appeals for the               
          Fourth Circuit in Ardbern Co. v. Commissioner, 120 F.2d 424 (4th            
          Cir. 1941), modifying and remanding on other grounds 41 B.T.A.              
          910 (1940), quoted and applied the Anglo-Am. Direct Tea Trading             
          Co. holding favorably and without reservation.  The Court of                
          Appeals for the Fourth Circuit in Blenheim Co. v. Commissioner,             
          125 F.2d 906 (4th Cir. 1942), affg. 42 B.T.A. 1248 (1940), also             
          acknowledged the Anglo-Am. Direct Tea Trading Co. holding,                  
          construed the relevant text not to contain any reference to time,           
          and stated that Congress had enacted the relevant text in 1928              
          intending to allow a foreign corporation to deduct its expenses             
          upon its filing of a tax return.                                            
               In 1990, the Secretary issued section 1.882-4(a)(2) and                
          (3)(i), Income Tax Regs. (disputed regulations).  The disputed              
          regulations interpret section 882(c)(2) to provide that a foreign           
          corporation generally is entitled to deduct its expenses only if            

               3 Sec. 6072, entitled “Time For Filing Income Tax Returns”,            
          provides dates by which an income tax return must be filed in               
          order to be timely.                                                         




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