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payments to a foreign corporation. Petitioner also does not
contend that it relied on the informed advice of a competent
professional that it did not have to file Forms 1042 and 1042S
for the years in issue. Petitioner argues that the interest paid
to GITIC and GXE during the years in issue was exempt and that it
relied on the advice of Mr. Wong and other professionals to that
effect.
We reject petitioner’s argument for several reasons. First,
it does not appear that the professionals who allegedly advised
petitioner did anything to ascertain whether petitioner was
required to file Forms 1042 and 1042S before petitioner filed its
original returns for the years in issue. There is no credible
evidence in the record establishing that a competent professional
investigated petitioner’s obligation to file Forms 1042 and 1042S
before the filing due date for the years in issue or that a
competent professional advised petitioner that it did not have to
file the forms. This lack of evidence contrasts sharply with
applicable regulations that clearly and unambiguously require a
withholding agent to file Form 1042 for a calendar year, even if
otherwise taxable payments are exempt, if the agent is required
to file Form 1042S with respect to interest payments made during
such year. Secs. 1.1461-2(b)(1), (c)(1)(ii), Income Tax Regs.17
17Sec. 1.1461-2(b)(1), Income Tax Regs., requires a
withholding agent to make an annual return on Form 1042 even if
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