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The Limited

The Limited, Inc. v. Comm'r., 113 T.C. No. 13 (September 7, 1999)

This case involved Subpart F of the Code---the controlled foreign corporation provisions. Some of the income of controlled foreign corporations (CFCs) enjoys deferral of US tax liability until it is repatriated, either in the form of a dividend or by having the foeign corporation invest its earnings in the US.

In this case, the CFC purchased nearly $175 million of CDs from a corporation related to the the CFC's parent. That corporation operated as a credit card band for the taxpayer's private issue credit cards.

The taxpayer took the position that the CDs were deposits with a "person carrying on the banking business" and should therefore not be treated as having been repatriated under section 956.

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