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Compaq Computer Corp. v. Comm'r., 113 T.C. No. 17 (September 21, 1999)

Compaq was approached by an investment firm after it recognized a large ($232 million) capital gain. It then bought $888 million of ADRs cum dividend, received the right to the dividend of $22.5 million, and sold the ADRs ex dividend for $20 million less. It used the capital loss to offset the capital gain, and also claimed a $3.4 million foreign tax credit for foreign taxes withheld from the dividend.

Source: Alice G. Abreu* ``Selected Highlights: Federal Corporate Taxation May 1, 1999 to May 1, 2000" Penn State 54th Annual Tax Conference (May 22, 2000).

* Professor of Law, Temple University of Law, Philadelphia PA 19122

Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 863-0048
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