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. Ph produced liquefied natural gas (LNG) in the United States and sold it in Japan. Held, the income from the LNG sales was derived partly from sources within and partly from sources without the United States. Sec. 863(b)(2), I.R.C. 1954, applied; sec. 1.863-1(b), Income Tax Regs., invalidated.
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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. Ph produced liquefied natural gas (LNG) in the United States and sold it in Japan. Held, the income from the LNG sales was derived partly from sources within and partly from sources without the United States. Sec. 863(b)(2), I.R.C. 1954, applied; sec. 1.863-1(b), Income Tax Regs., invalidated. Held further, respondent may require P to apportion the LNG income between United States and foreign sources according to Example 1 of sec. 1.863-3(b)(2), Income…
1Opinion of the Court
KÓRNER, Judge:
This case is presently before the Court on the parties’ cross-motions for partial summary judgment, submitted pursuant to Rule 121.1 At issue is the proper source and character of Phillips Petroleum Co.’s (hereinafter Phillips) income from certain sales of liquefied natural gas (LNG). Resolution of this issue initially requires that we determine whether section 1.863-l(b), Income Tax Regs., is a valid regulation. If we hold that the regulation is invalid, we must also decide whether respondent may require petitioner to apportion the LNG income according to the method set out in…
2Cases cited7 opinions
- Commissioner v. South Texas Lumber Co.Supreme Court of the United States · 1948
- United States v. CorrellSupreme Court of the United States · 1967
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- Commissioner v. Portland Cement Co. of UtahSupreme Court of the United States · 1981
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