-109-
HOLMES, J., dissenting: The issue in this case is easy to
understand. Section 882(c)(2) denies foreign corporations that
have U.S. income the benefit of the deductions and tax credits
they would otherwise get if they fail to file returns “in the
manner prescribed by subtitle F.” Section 6072--which is part
of the Code’s subtitle F--imposes a time limit for filing
foreign corporate returns. Before 1990, courts had construed
the phrase in section 882(c)(2)--“in the manner prescribed by
subtitle F”--as meaning neither “foreign corporations must file
their returns by the deadline set in section 6072" nor “foreign
corporations have till the end of time to file,” but rather that
“foreign corporations have only until the Secretary, after a
reasonable time, prepares a substitute return.” The regulation
that we invalidate today replaced the old “reasonable time
standard” with an 18-month grace period1 beyond section 6072's
deadline, and replaced the preparation of a substitute return
with a written notice. The 18-month grace period might be
shorter or longer than the old judicially-constructed one. It
is undeniably more definite.
1 As Judge Swift carefully explains, see dissent supra pp.
90-93, the disputed regulation is fairly complex and establishes
a number of exceptions to the general 18-month rule; for
simplicity’s sake, I refer to the regulation as creating an 18-
month grace period.
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