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liable for any addition to tax determined by respondent under
section 6651(a).
FINDINGS OF FACT
Many facts were stipulated and are found accordingly. We
incorporate herein by this reference the stipulated facts and the
exhibits submitted therewith.
I. Background
Petitioner is a Barbados corporation whose mailing address
was in Bridgetown, Barbados, when its petition was filed with the
Court. It is an accrual method taxpayer that for Federal income
tax purposes files a Form 1120-F, U.S. Income Tax Return of a
Foreign Corporation (Form 1120-F), on the basis of a fiscal year
ending on May 31. Its sole activity during the subject years was
owning 160 acres of unimproved real estate (U.S. real estate) in
San Diego County, California, and receiving option and rental
income from the U.S. real estate. Petitioner has never engaged
in a trade or business in the United States, and it does not have
a separate business activity in Barbados.
II. Petitioner’s Formation and Issuance of Additional Shares
Raimundo Arnaiz-Rosas (Rosas) is a citizen and resident of
Mexico. He acquired the U.S. real estate on December 30, 1986.
In June 1991, he formed petitioner as his wholly owned
corporation. He transferred the U.S. real estate to petitioner
on November 21, 1991.
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