-38-
only to foreign corporations and explained that Congress intended
to impose special conditions on foreign corporations vis-a-vis
domestic corporations. The court stated:
The difficulty here encountered by the
Commissioner in attempting to ascertain the
petitioner’s correct income tax is a striking example
of the many administrative problems inherent in the
application of the federal income tax to foreign
corporations. This has prompted Congress to impose
special conditions on such corporations. Indeed,
unless a foreign corporation is induced voluntarily to
advise the Commissioner of all of its income
attributable to sources within the United States and of
the exact nature of all deductions from such income,
the Commissioner may never learn even of the
corporation’s existence, and, in any event, he will
probably be unable to determine the correct amount of
its taxable income.
The situation is pregnant with possibilities of
tax evasion. In express recognition of this fertile
danger to the orderly administration of the income tax
as applied to foreign corporations, Congress
conditioned its grant of deductions upon the timely
filing of true, proper and complete returns. This is
in addition, of course, to the 25% penalty provided by
Section 291 of the 1934 Act for both foreign and
domestic corporations which either file no return or a
late return unless “reasonable cause” for the failure
to file a timely return is shown. * * * [Id. at 909.]
As to the “terminal date” that the Board had adopted in
Taylor Sec., Inc. v. Commissioner, supra, the Court of Appeals
for the Fourth Circuit explained that this date was justified
notwithstanding the absence in the statute of a time element.
The court stated:
The conclusion that the preparation of a return by
the Commissioner a reasonable time after the date it
was due terminates the period in which the taxpayer may
enjoy the privilege of receiving deductions by filing
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