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we evaluate the revenue ruling under the less deferential
standard enunciated in Skidmore v. Swift & Co., 323 U.S. 134
(1944), according the ruling respect proportional to its “power
to persuade”. See United States v. Mead Corp., 533 U.S. 218,
234-235, 237 (2001).
Rev. Rul. 90-44, 1990-1 C.B. at 57, states in relevant part:
If one or more financial institutions are members
of an affiliated group of corporations (as defined in
section 1504 of the Code), then, even if the group
files a consolidated return, each such institution must
make a separate determination of interest expense
allocable to tax-exempt interest, rather than a
combined determination with the other members of the
group.
However, in situations involving taxpayers which
are under common control and one or more of which is a
financial institution, in order to fulfill the
congressional purpose underlying section 265(b) of the
Code, the District Director may require another
determination of interest expense allocable to
tax-exempt interest to clearly reflect the income of
the financial institution or to prevent the evasion or
avoidance of taxes.
The first quoted paragraph parallels the text of the statutes,
stating that the subject calculation “must” be made separately
for each member of the affiliated group. The second quoted
paragraph departs from that text, creating an exception that
“may” apply to taxpayers under common control when one or more of
the taxpayers is a financial institution. The ruling sets forth
no reasoning or authority for the exception, other than stating
that the exception was prescribed “in order to fulfill the
congressional purpose underlying section 265(b)” and may be
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