-4-
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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