Phillips Petroleum Co. v. Commissioner
United States Tax Court
P is an affiliated group of corporations that filed consolidated returns for the years at issue. PH is the common parent and a member of P. During the years at issue, PH, in a joint venture with Marathon Oil Co., produced liquefied natural gas (LNG) in Alaska and sold it according to long-term contracts to two Japanese utilities, who took title to the LNG in Japan.
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P is an affiliated group of corporations that filed consolidated returns for the years at issue. PH is the common parent and a member of P. During the years at issue, PH, in a joint venture with Marathon Oil Co., produced liquefied natural gas (LNG) in Alaska and sold it according to long-term contracts to two Japanese utilities, who took title to the LNG in Japan. In a prior opinion in this case, Phillips Petroleum Co. v. Commissioner, 97 T.C. 30 (1991), we held, inter alia, that the income from PH's LNG sales during the years at issue must be apportioned according to Example (2) of sec.…
1Opinion of the Court
KÓRNER, Judge:
By statutory notice of deficiency dated July 20, 1987, respondent determined deficiencies in the Federal income tax of Phillips Petroleum Co. (hereinafter Phillips or petitioners) and its affiliated subsidiaries1 for the taxable years 1975 through 1978. Included in the notice was a determination that none of Phillips’ income from sales of liquefied natural gas (lng) produced in Alaska and sold in Japan to Tokyo Electric Power Co., Inc. (Tokyo Electric), and Tokyo Gas Co., Ltd. (Tokyo Gas), was from sources without the United States. Consequently, respondent decreased…
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