-73- result that the foreign corporation is required to pay taxes on its gross (rather than net) income. We know of no statutory authority under which any type of taxpayer forfeits an entitlement to deduct substantiated ordinary and necessary business expenses simply because the taxpayer files a tax return untimely. While respondent proffers section 882(c)(2) as such authority in the case of a foreign corporation, that section does not explicitly support that proffer. We also bear in mind the Foreign Investors Tax Act of 1966’s legislative history, which adds to our understanding that Congress was then mindful of the interpretations set forth in Anglo-Am. Direct Tea Trading Co. v. Commissioner, supra, and its progeny. The House committee report, for example, refers specifically to “existing law”, states that a foreign corporation is entitled to benefit from its deductions “by filing a true and accurate return of its total income”, and makes no mention of a timely filing requirement. See H. Rept. 1450, 89th Cong., 2d Sess., supra at 90. The Senate committee report likewise makes no mention of a timely filing requirement. The Senate committee report, on the other hand, does state in a manner consistent with our view that the committee intended for section 882(d) to allow a foreign corporation to treat its real property income as effectively connected income in order to deduct its expenses related to that income. See S. Rept. 1707, 89th Cong., 2d Sess.,Page: Previous 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Next
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