Swallows Holding, Ltd. - Page 117

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          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.,           






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