CTA Case No. 2580 (Decision)

.. . � .l"f ; ..... ... '� ~ j\~ �l � . t! i o' REPUBLIC OF THE PHILIPPINES COURT OF TAX AF'PEAU3 QUEZON CITY KIMBERLY-CLARK PHILIPPINES, C.T.A. CASE NO. 2580 INC., F' ct.i t.ion<~r ~ COMMISSIONER OF INTERNAL REVENUE, D E C:: I I DN {\pp<�~ a l. i�l�'"""� h f0 (~ 1"l t ,:;~. k E~r�l �f 1��om cl r.:' c:: .i..si o n of th E-? re s pond e nt Comm.i s s .in n!:::! J��� of In ter.. n <3' l F<evF.! nue d a ted ,Janu a r� y 9~ 1 974 h o l cl.i.nq p~:~t:..i.t:ic.,nr? l'- li i:\blf.~ �f or� thE' a mount o �f P-49~ r.Y 9!"i , <;F;? .:H1rl F'.l.'l 'i ,:'5 :.'.i'l .4 4 rJ r" c;, tot <:'! l of d p �f i c:i enr.: y ~ hh uldi.nq s ow�� ce f D I'" th'~ y eHr~s 196~� a nd 1966 , inc:lu ~, .i. vr::.~ of s urcharg e and i nterest. F'et.i.t.i.onr::.?r l< .i. n be l'� ly �-�Cl,:'.l'' k F' h .i ljp pi. n 'e~-;, Inc . .i. ~; a dom e ~; t.i. c: c ot- puJ�- .:, t.:.i o n �::> nq ,:.~. CJE.'d i.n thP m i3. nu'f,:~c:t ure of ti ssue p aper und er li c e n se b y Ki mbe rly - C lark U. S. A. to f .i.n i:'ll"lC e the pur c h ase of rn ac h .inel"' i es '" d f0ql.l:ip rm:? nt which C:i.r�e flf2~:� d r.~ cl .i n the 171

... DECISION CTA CASE NO. ~ ~gD expansion of ite operations, pet i tioner obt a ined Ltd . ~ both . non - t-esi. dent for~ E-~iq n cclr'- pnr-a tiun n ot engaqed in t r . ~cl�?. or \�Ji thin th e Ph i 1 i. ppinf.�~3 Tht-? �::: c.~ .id loc:l. n ~; by unsecured promi ssory n otes with interest payable qu a r�- t:. e r~ l y. T h ese machi n eries and e qu ip me n t were pu rchased in i.n s; tallHH?.nt t hrr� ouqh d(? ff.:? I'T ec:l pa yme nt plan s for- t'li t sub i s h .i. S h o .i .i. f<a .if:; h a L t .d " ~ I �::, h .i. k i::\ \1-J ,::\..i .i. mi:\ �-� H a r~ .i. rna Limi t~?.d ~ Schv i ec h e rt ive~ k e Aktienqe sc ll sc h aft. c~ n d t l.tJ t,~~;; :i. n Cl h rJ �..t s; c.;! In ternational Compan y . It like wi s e e ntered into a L. i c t? n ~.;i n q Ag ,.-f.0f.?men t. �r r?c: hr�1o 1 o<J icc:~ 1 As~:;.i. st. ance v1.i th :i mb e r .1. y�-��C 1 c"- ,~ k Corr�porr.~ t .i.o n o �f U.f.i.n � �:~nd ''''f:lr�r::�c cl t ~:J P'''Y fec~ s .~nd roya1t.:i.�?. r..:; aqqrr�f.?.q ,:,,t .i.nq :,~ ;~ f) f r) E�t.i.t.i.o ll (;? r� ' s to t,n l net. sales (p . 95 ~ BIR re cs.) .i.ncomf?.~;; p <"1.y ,;i b 1 f~ to forr�e ign E. upp 1 iE-!r��s of mac h.i.rH?.r iP s ;:u1c:l Pq u i pm~::n 1: and to the l e nd i ng forei g n corporations were e ntered in the pet:..i.t. .i.onE-! rr�'c.-; bo o k �:; a nd c h a r�- <Jf0d tu th ~:> .i r lt!:?. r � ~;?.~.:; t. e :�:pen sf.?. acco un t: ; and m.?.~ch .i.nf.?l'- y under�� co n st r-�u c:tion account .~nc:l l ong-term accou n ts p aya b le account.

DECISI ON 25g0 CTA CASE NO. - F'eti tioner- in in i:lOC.lk S F'98~ 9 80.7 3 , r ep re sent ing i nter est i n co me p ay a ble to i t s foreign cre d i tor the Barbet~ Ltd. I t ~�J <::\ s on ly Bar- b E�~t~ Lt.c:l. beci':I U'3E' o'f CE>ntl'-a l B.:~. nk ,--est r- ic:t.ion s ( t.s . n. , June 9~ 1986~ pp. 12 a nd 7 8 ) and on l y upon the:\t rr?mitt c:\nCP did Pl'? t i t i un F' I'- ~' '.it.hh P l cl t:. ~ 1r:~ ::!.0% with ho ld ing t o:, :: ;;,,rnounti.nq t .u P~.?9 ~ .�)c? tl ,OO, ( E ): h~::; . H an cl IJJ) � In 1966, p E~ I:..it.:i.onF:> Ir� ac: c r- u E~ cl :i.. n it ~:; books thP F' 2 4~8 2 0 .2 4~ or 3 to t a l of P961 ,6 49.02 cl ue and payable to B ar-�bE> t ~ Ltd.~ r:�o<;;tt-::!r.. VJhr-~ E? l er-� Ltd., and It was not able to rE~m it. t hi s kJ~) t .<.:l. l in t. c~~ t-� p ~;; t .i n c orr,t-:'! "' h i'"Oc1.d b e,~c ,;,use u f Centr"i:\ l ( pt.H" � Petition; no t ~"~ .ith h o lcl thf'? ::~;0 }:0 wit l�l l lo lcl :l.nq t ;,,:: clu e t h:> r.. Po n '"t t h e t:irn F! of r.�,, c:c n Ja 1 � Onl y upon act ual rem i t tan ce did pPtition er withhe ld t h e 3 0 % wit hho ldin g t ax amounting to P288,495.00. Th e o nl y js~.ue to b e de ci ded i n t hi s c:a s e .is whethr?r � pE~t i t :l.o n er � p .:,, y the 173

DECISION 2Q"go CTA CASE . l'.u. - �-- 4 �-- withholding tax? s due on s u c h ob li ga t ion s upon ( ac tu <:l 1 remittan ce and not upon ac cru a l quote: T hP l one qu e�=.; t .i 011 t. r'~ n d !:�~ I'�� eel f or r� eso lut.inn i ~"; ''Jh r> t hr::~ r�� c�t� not t h ~? obliq .:~t iun t.u V'J:.itl �1holc:l and p <:�y in cc lm E? t .�3 >~ ..�. at-�so u r �c:E' on thE' n :.,y<:'\ l l.: :i. P <:; :i. ~;; u. p c~n the a c: c: r� 1..1 a 1 n f t:. h P ,,..o y ,,., 1 t i E? ~::; c.l r�� upon thf~ ac::tui:'\ 1 r�� p mi � 1~. t <:�inC:: I'?. or p .:~yrn�::>nt t J � 1 e r�E~o f . F' r:> t .:.i. l ..i o r1 <:> r � mi�'\ :�. n t:.�~i n~::; t �. h c:' t the ,,.. E~ ~.., .3. ~=.; n o obl :lcF\t� io n to cl t::- cluct ~ \�J:ithh o ld !, Dncl p .:~ y tl�lt:�? 11-J.it.hholcl.int] t .:~~: in l 9~i. ~? sincE~ �t.hE? r� oyi:d t iE?�;; c: u uld n ed : h E~ r �P m.i. t Led r:l uf:? to CF�nt.r-.,"\1 B i'Hlk r�p�;; t r �i ct:. i o n3 . ., ,., ~;; u b .n ittinq , howe v er, that th e Jiab j l .i t y to withhold and pay th e i n co mP tax wit hh P ld a t so ur ce from ro ya l t y p ay me nt s to a no n - resident foreign corpora tion~ l ike Ba ye r Aktie nge se l l sc h a f t , L everku se n B ayer mer k , 1s at the time o f the a ccru a l of s aid roya lties a nd not at the time of the act u.:~ l r� r~ m .i. tt a ncf.? 0 1,.. p.:.1ytm ?nt thF?I,..E,o f, re s pond e nt. I'"P l i f? S m c.~ .in l y 011 Bul'. !2 <'~ 1!. o f nu In tE'f"Tl i:~ 1 r;: [! \- T!rlt.lf:? 1 :i.nq 1\ln" �; 1. ����oo ::::' r:J ,::\ t .E>d Fr:~I::Jr� u,:;,,,.. Y >' b!, l 9l J ~ t-IlE? J:�P I' �t .i l �t" rlt pCJrti o n s of which ~rc qu ot ed ~s foll o w ~ : ''Thi ~:; l'�e�f t-::' r�c,:; t .o yotll,.. 1 et t er� dated F e bruary 16, :19 7 1 r�f:..> qU E�' ~::; tinq .:1 r �u l i rl q c:l <::; to t .h l?. b .::~ �::.i ~;; cJ�f t h r~ 11-J:.i t .h h n l d :i. ,-,q t .<::~ >: d ue on f i lm I' � E nt.:.":~l '--5 c �1,. ,-� uy alt:ie f-=. payab l e by you to non - r e siden t foreign film cnrpor~ti on s. II "In )IOU !'" l ettE?I.. yo u c: on ten cl f. ~ cl t h <::d : thE:> :::;. ~'i '/. ~"Jithhnlcling t.-::~;.: �-5 hnuld f:> (? b i::~~:;p d only on <:1 c tu .:~ ll y r�� F�mittc'\ble:' amoun t under Centra l Bank regul a ti.nns and not on th e e ntire c:\ mOI.I nt d UI�:? i:": \rld p<:lya J:JlP t: o the non -res ident forei gn co r poration . 174

DECISION ;26K0 CTA CASE NO. - ~j ��-� T h :i. ~:; :: or 1 +.:F~ r 1�t..i o n 1�1 C.I"' r 1o 1 E:!<;IO:\ 1 b .=.~ ~.,., .�.i.. ::::. , 1.��1i t 11 h n 1 cl .i. r1q t.<1 �,: i~:; not. d epr" rl( J C�~ r �l t un I' E'm.i �1 �1� ,:\r l'::: r; .' of t: h r-c~ inCU fllf�' p C.:I 'y' c:lbJ e> ' C\ �!ilL~ I!UI"J ��� n::~s .i. d f:! f l t f 0 t.. P .i q r1 C: U I'" r:��o r��,�~ t:..i C".\ n bu. t on acc:n.t.:~l t.i�H?. I'� c~nf.. nuc h be:i.nq thE' c;::~ <::; f~, a 1 t.h nuqh a put�� t.inn o �f the '"''notmt d U(7? t .o !:. he ntm -�� re sidert f o r eic n corpo rati o n c: a nr1 o t b P r� em.i. t tt>c:l n 11 .:~ ��:c u un t. cl �f Cent r �.:~ 1 B .-::~n k r�p <::; t .r�� i r:: l .i o r1 ., t hr.~ t �'" >: ch.IE.' on ~::;,,~.i.d l'o r- t. iorl �;:; hnu.lc:f b r? d E.>dttc t. r~ d .::~nc:l ~>.J.i. t i�lhf.�? J c:l as .if thE~r� (�? is no res triction. ' n~~ ~;_t r � .i c: :\:t? d f t\!"l d .~:;. In c:onne c: t.i.on wit h the l'.. t:-:>!5 i�: r�� �.i.. c +:. i nr 1 on t .h P transfer of fun d s from IJ. S.. to ppr�:;c m~5 in Noi'.. \'~ �':\Y ~ Df.-?nrn.:n-k, thE? Net i�lr?l'.. l c:\n d �;; , B r-> l 1J i. urn, l...u ~: embnu 1�� g ,3 n cl F' 1'.. :3 1'1 c P, th~ tax s hould be v~ .i. t: hhc~ 1 c:l :i. n t. h e !5a rm= mannE!r� EI C:c� i �f no r� e �;:; t t�� i c t .i. on e >: i r::; t. f.:-:> d � In r:: u �:; t .odi.!l.n i::I C::CDt .tnt <o:; ~ t .h e namP o �f thr�? �for� E:'.i. <Jn b ,::~ nk or� ot.hE'r ft1r� �~ .i.qn p t?. l-�s nn �::; hou J d t:n~ Pn tE?r-<-:? d on the owner s hip c::e rtifi~ atp~ ,, n (j <�'.n ,::~ mr:~n cl E?c:l Ol��l n e 1��"" 1�1i p C: (::> l�� -l::..if :i c:c\ l: E:! f:i.J.(�? d C\'"; �;;; oon <'.!~::; t �. h E? E:\Ct.U.C'I l UI!HH;!I'- :.i. f::1 d .i <.::>C l (J~;;c:~ cl � ' (CCH , J..<:j)t;Cjl ~ V10 1 � 5 !I p ;,,r� . �1 U ?~:~ . 40~3 ) In v iew tht?I'"P nf, th.i. <:;; (Jff.i.cr:? be J. .i.P v e s> .:\nd !50 ho l d ~c.; �l� h ,3 t t i l(:? :35~1. \-J.i. i:hholdin{.;t t: ~ti ~ ~:; h cl \.t ld be deducl:. (i') C; .::1 ncl ~�J.it. hh E> lc:l on thE' f?nt:i.r�F' .~mm. mt Clf film Y'!'.~ i�l t.r.1 l ~:; or royalties pay ab l e to t h !:? non ��- resident forP.i.gn f.i.J.rn 175

DECISION ;25?0 CTA CASE NO. - -- 6 corporations includin ~ that por� t: :.i. on ~"' hic:l �l !' on a.cc<:::oU.r1t o �f CF~n t .t.. '" 1 Hc-,\rl k ,... P'o; t I" :i.c: t :i. o n!�:: ~ c: <.:\rl not <.:\S yet. 1:.,<:-::� r �(? rnitt e d ,:,lhi'.. Oi:'l d . 11 {.'!Js r,~>: pr�� r~~-::. <:s l y <::; t. ;::~. tE~d thr=:~ t- e.i. n~ t i��,E? But- f.?�" '��' u �f Int er nal F~E~VE! nUr:2 r- ul E~ cl t1 -,r.1.t w .it hh o 1 c:l in!] t a >: .J. ::.-; n n t (:1��? p!�:::? nd f..~ n -1-:. u r1 r� ('? rn i t tan c: <:-:> o f t h E~ i.11c: n rn ~:�� p ,.,, v ,,., I'l 1 e t o t.-.1�1!�:�? non �--r�� f.~ sir:lt:! ll 1: �f o l�- r.-:�i q11 c u,�- pol�� "'I .io n but o n c\CC t��ual -1:.: I "IE�~ ,�. f~D f � nr rd """'' �,:;u! : h, a 1 t h ot.!CI h thf~ incomE� c annnt be? ,,. "'"m:i. t.:tecl o n ,::..ccot.'.nt of Ce nt.r�a l B c:,_n! .: r�!::>�::; t .J�- ic t .:i.on-::;, tl �1e ta >: clue thereon s hou ld b e c:l er:lucted and withheld as .i f th E!I'"f:~ .i. ~:; r1 o l' . f?~'d:.r--i c t..i.on . ~r h(�;:~ ~:; t ,:�:\ t.Ll t E~ .i.n V (:J J. VC:�~d i. :.; t f.-:~ f.:~C i C)r l ~:;::::.(b) (2) of the Nat: i. nn.::~ l Int.f? ! TI," l r:..: evc:-?nu. r:~ Coclf7.', th P c:o ��,tr-�o J. l inq pr�ov:Ls:;.in1 �1 ~;; of ~~hi c: h r-(::-> �'H.:I r.:1 '=� �f n l l cwJ s : "UE c: � !'.i:::, ( b ) ( '? ) Nq l! ~- t !::~ ~;__.t _c:l E'_l:lJ Jqrq..i,c;lt::L (:::_qr.: pqr:-a.t .iorJ .<.f. In thro:.� case o �f �f o r - e . i . q n c:or� por� ,"tions r.; ubj E~c:: t t .o ta~ : under� thi ~;; T i t l e , n o t r:~ nt:J<'ICJ E-d .in t r-;:lc:l f? o t�� bu!:, i.n c-::~s,s \N.i t .h i ll t .h c F' l�-,j l.:i r1r:'.'i. nr::~!::: ~ th e n :? !'; h ,,d ] hE cl r:� cluc:: tr?d ,:\ IH I lt,li l.:h l lEdcl '"t t h�0 <.,~, c::�u ,.. c: F~ in t 1--H-} s;.,:;qnc;� n1<:\ !..., n e ,.- ,-ui cl upon t he sa m ~ i t e ms as is pr� ovicl c d in t'3 ub r:;c::�ct..i.o n (b ) (.1) of thi s section, x x x a t ax equal to ~!, 5 per-- ce n t l. h ~::> r�e;~ o'f . Thir"; s; h r::tll b! ~ r-� etur-� n E~ d and p E�\ .i d the ~?i::'l.IT\e m <::~ nn er <'3rH.i s ubj E~c t. t .o the 5<-.:\ me c one! i t i.on!5 C.:\S pr�-nv i dPcl in s f.-?C: t i C )f") ~.5'-1� ,. ~�~ ~�! >~ II And Election ~~~ :3 (b)(.1.) of th e-? !5i::'\me Coci�~ pertinentl y p r o v ides : ( h) Npr.1 .:-:::r~ ~~? .icj ('~f.'l.t. . �E\ 1 ;i E' rl~L '"n d .'f.CJ.. ~..i .fJrJ. ... o::_Pf'.P q r~_,::\ t~- <;:HJ ~:; ( l ) t~_q !J.:-�� r.::.C?..?. ,t (~ ~UJ t ....... . 9.J..! .c;~ r.:1_~:; � Eve r- y ind.iv.i.du,:\1 ~ co l~ por-� c':\t.i.on , p ,;,rtner-���- sh.ip, o r <~ !:.-:;s oc.i ..:~tion ~ in ~--_~h,~ te v f-?1'.. 176

DECISION CTA CASE NO . . . 2s-KO .�... ] capacity actinq~ including a l ess~e or mortgagor of real or per- ~:=.c:mi: ll plr� opE~I~ t. y. tr�� u s. t c:~ F! a c t i n q i n an y t. r- 1...1 s t c:: El p a c: :i. t y ~ P >: e c u t. o 1r� ~ adminis.trator, receiver, conser - vator~ fiduciar y ~ emp l o y e r , and r~ver-y of �fic e l~ or- f'! mploy<::-~P o f th E? Go vr.�~ r � nn r E~nt nf the l::;:r..~ pu. bl :i.e: of th e Philip ~ines h aving th e co nt ro l ~ r~? c:Pipt ~ custody, di :; p rJ'5D. l ~ o �- r ~ v m e nt of in terest d i v i d e nd s, r nts , royaltie s, sa laries~ wages , premium s~ ann uities, compensation, r e mun e rations~ emolument <:;, or- ot h r.::>r� fi>:Pcl or�� dr.�~ t. E~ r�� m in "' b l r:~ <::\ n rl t.' .::1l � p <:-::- ,�. �( o cl :i. c: �""~ J , c~r� c �"~ s: u i:'\ 1 q <Li. n <:; , p ,... cd' .i. t .s , '"'�n d income , a nd cap ita l qain s, of any non - resident alien not engaged in tr-adP or- bu s.i. ru~�~::;s \t�Ji thin th E? F' l 1:i. 1 i p p .in E-~~:; , ro:; h ;:,, 1 1 ( F.~>: c: P p t in th E~ cases provj.dpd in s u b - secti on (a)(l) of thi s Section) d e duct and withhold from the annual~ pf:::>r�iodi r~: al, Dl'.. C:: a SUii:\ 1 qa.i.n s, pr�n �f i t s ' c":\ ncl in c ome. and C c":\pit .:Al q a in :::;, ''" t c:~ >: l:.? qU. i:~ J to :::.o�.%. t h e i'" F:� o f . The r.:;E~ J: )l'- ovi~:;ioll'5 , by t .h E! v1a y , 1,.,1er��e me-> l'"f? 1 y i mpo 1r� L F~ c::l .::1n d c: n pi E�d t ,:~ l nro ~:; v c~ 1'.. b i:l t. i m f r �u m s imi 1 i:'l r- ~�J .it. h 1�1n 1 cl :in g t ,:=~ :-: r:� ,.. ov i ~:; inr�, ::; n �f t h e l.Jn i. t:. F! d f.-) l: i::\ t. f:?~3 r;:E�vE:�nU��!' C< Jd f.~ [ Flc;:�c: t .io n li.J. ~) (b)]. (.)cc::or-dinql y , in c:or�, !:::.u nanc:c�! vJ.i..th !=:,�::>tt.led r. ulE�:; of s t. ;::.L utn r��y cot �l~:. tr- uc:ti on , t. l�-,e intE�r- pr�� f~ta tinn th r::?v :��,av f? l"' f.'!C:f!!i.ved in the United States h ave a uthoritati v e E�ff E-? ct in t.l �lr.? pi�- opf.?r c:o n !:;tr��uc:t.i.on a nd interpretation of our law . Thu s, as correctl y noted by pet.i. t..i.onf.'~ r c:1 nd vJh.i.c h .is not d i s pu t.r:~ d b y rf:'? s pnnd(�?n t: 177

DECISION 25~0 CTA CASE NO . - 1. In .:: r�I'" .i \f .i n q .:;, t B 1 F F::t 1 I i. n fl t�lo . 7 l ���- r (!(:):~;, d ;.::~ t.F!d (? b I'" U c::\ I~ V ~,? 6 , J. ' ;' 7 ..l. � ou r� B u r�c,;;IIJ cJ f Inte r��n .:t l Re ve nu P q uote d as .:1 u t .h nr��it. ..l thtZ�! e:-:ceF�p t o f ct Un :i.t.e d ~:-; t .::~tr~ s; l n ter�n ;:i 1 Fo:e vE! nue SPr.. v j_ c: f:? n ..\ J i nq ~-<I h ie h .i ~; f n und .01 t P �3 F' . 48 75. 40~."� o f CC H ' 1.769' '�/o 1 IJ.tne !'L n app ea rs tha t the sai d U .S . Ful .inq i s .:':"lct: u e:\ l l y t��l .i mf::> oqr,;;t ph r::ul:i.nc;J t� lo . ~'1 07!'"�, ~..th.i. c h was issue d by thP Offic e of the Co mm.i. ~:; s .i. on E! r� u �f I ri tf:?r� rl t~ l r~: E'VE? n U E! ' y n , ~�J c:l s hi II <J t CJ r�t D � c:: � , Cl n ,J I l 1 l r:;� '1 0 c:\ n <: I c: �7'1 rl he �f o und i:7tt" t�. l�.,c, C.:umul c:\L:i. -..1 �' f <t�. ] l c t .in J 7.!J.� ) ..�� ;.~, E1. t . ~)c::t qE�~ .t.I.J. .1. , 2. 'Th!:-:> r:;.::d.d l''l .imr,.?oqrc;lpf"�, n u. linq hln. 5 0 7~'.\ ha s bee�n dr:��c: 1 c:\ I'' E� d q i:!� Cl l .f?:!. t:.t.:.::. by th~;;� Unit ed States I n te r n a l R ~ve nu P SeFvicr r:: r: j t ~";; f?.! 1 �f .in i t <;;. \I ] :i. f \ (] l\l[) � 7 () ..... :~ f? ::::; � ('-;> V f.:\ l'l l.\ " (l.J.!3 . Intc.:'! l'' l'lc:il r::t:' V t'�! l'l\.1 <":' F!t�] l (:� l ...\.1 1 l'l o. 19 '?0 � 2:::; ~ d i:l tl�? c:l ,J\ .lnf" B~ :t ';)'/(�\ f!: :i. ~: thtl '=> l?.viclr.:>nt. th .:~t i.rt .is,~:; u.i.J 'l C:I i t::; PIP 1:::ul in q N o. 7 1 - 00 3 on F~ bFu ar y 2 6 ! 19 7 1, auF own Bureau of Intern a l Re venu e h as re li ed on a Uni t .f.:.> d St <":\te�~, Intel'' f'l cl l nc!VPrl\.\P f.)E? I'-v.i.c:e r ulinq tha t h a s a lready b Pen overrul ed, t h e <:::' �'A ITle h .::-~ v i nq bi:!E~ n r:II?.'C: l .::~J''e d obf;; o 1 P t l? .:;�, .::: of ,Jun e ~ .1. 9 7 0 .. ~::: .. Fo l l oV'J.inq thE-! cl!:�n:: .i ~::;io n of th �-? . . . Un i t.1:=?d St at p~:;; D .i. s t .1�� i c: t Cot t.l' ' L .in L. ~ .n ~ ..c .~;t.\::IJJ:: ~~P !... . V.?.� ..J.,I u .i,. t: q!:J.. f' J:�~t.�'?!0,,_,_ 1.16 F:. ~:3t..IP p B :3~""'� rr.:>nc:IE11"�ed on i'l ovembE! t-� .1. 9 ~ 1 (? !'1:::~ " t .o t l� lE�~ effect t h at co rpoF a t.ion whic h h e ld 1 .i.e: ~:::�n st1~ . u r�1c:l !;! r. P�'~ I'.E� n t ~:; o~�m <�=! c.l b y n on -... re s i d E' n t ,:~ J. i e n ~:; ~;~ h o ,:~ �:; <:'\ r. e ~~ u 1 t o i' b l ock.inq pFoc ] am a tinn wpre forbidden right to rec:P i ve o r d ispose o f roya lti es was n nt b o und t o ~�\t :i. thhnl d t.::1>: bl;:>'fur.. P pc7:\yrnerlt o �f r� oyalt .ie s , l.: h ~-:-1 r.. ul~::! t. I� J;::~t i!:; n c ,~�~ obs l:! r�vE!d in the United St3tPs is that the obligation to withhold a nd p ay the ta x :i. s upon p ay rm:> n t or� r� end. t ti::\nc: '=' n �f t: he i nc:om e to a non - r es ident a l ien. In th e L. � D. c.:uJlk Gq. Ci':I :-:: E�',, 1--!hf.�?l'' f? t:. h e �f i:~c t:.1..l c\ 1 st:! t t i 1�1q ~ l a~-<J :i. n vo 1 ve d Et nd i. s~:;ue 178

- DECISION .2..:)$""0 CTA CASE NO. - ��- c; ... l:i. tiqai:P d i:\ l'" t? pt�� ;:~ .-:: t..i. c;:;. l l �; ( l n <:1. 11 f ou r�~; I>'J :i. t .h th E� c ,,, ~' t? ,;;, l: b c:..r� , p 1 t:\ i. n t.i �f �f , a Deli:.~I�J .. . e c Dt"' POI"'i:?~ t.ior�~~, held l .'.i. c: E~ n ~:3 t:.~s; un dE�r� p i':\ tent: S O~�Jr\ f." cl by t. \.-.10 rl 01"1 -�� I~ E~<:; .i cf E~ rl t. c':\ J i f.? f'l S , Robf.'? l'"t DoqrE.� ,;�mel Emmanu e l c:le T l~ ey. Doth p aten t er.~~.:; Wl o�~ r� E~ f>I�Jis~::;. I.Jncl e l'" 'f'�. he 1 ic:P n <::;.i nc; l aC.Jr� e E�m P n t ~;;. , p:t ,:~ .:i.nt..i f �f ohl:i.n ;JlF�:� d i+:.sc::!l'f to Pi'~Y 1'"' 0 '/i:':lll:..i.t :~<::; tel D o q F:' c::lnd cf p l'I" E'Y� ll"l .it.s t i�"E?i:~t ml? n t o 'f thP .i.mp <:1c:t of 1�� uy.::1 lt.it:=>':; o n i t <::; up~-:.:� r.. ,:~ L .i. I :J I"l ~o; , plaintiff~ ,::\ cll �l E' I' 'inq t o the accr.. ual m r.:~ t: hud o �f ,;~ cc: ount.inq , l'�?nter"ed n r.~ t royalties a nd withhP1d t axes as accru ed 1 i ,;~ b .i. 1 i t .i. P!oi u �f .1. 94 .1 ,::1ncl :1. Cjll.l ;>, t .h e pl?. l'" .i o c:l <:; involvP cl i n t ht?. cas e. Thu s ~ 194.1. i:?. nd .19 1~:,~ t I"' Cl'l E:l 1 .i. E?S .;,l.f'l d t ,::1>( t?�:; ~�JE~ r " E'.' �:; e t l...l p aS ,;�~ cc ount:.s p .:.~ �:,.<"hlr.~ nn pl <~ int. i. �f'f !''i book!'~ C:t nd a r:=:. p E:I r� t o �f .i. t f:', co!::; t:. o �f do.i n q h1..1s .i. rlE~r::; s �for� tho~:,e �'/r::.�i''''"' !"-�. 1\f o vJ .i. t �hho l c.l i.n q I" E:~ tu r��n~:. �f o r� n Oll "" l'" �?~=:; .i. cl P n t i'=' l :.i. f:?n �;; Duq ? ,.;\ n d c:l F~ �TI'- r-:.-~ y \�Jc� 1��p prep2 r ed for 1 9 41 o r 1942 . While the C I'" . i t :i. C: i:OI 1 i. ::;:,�:o. U f-:') .i. <;:;. l,,lf l f.? rl t .he::~ I" t:;~ t.u I' T I !:; I>'JE' 1'"8 duf.�" �for.. r- D ~ti:"1 ll�..i1;2s ,;, t t l'" .i.h t.t t .,::l tllP t .o sa l E~s:, mi:':l. c:lf:? by pl <':int..i f'f clur.. inq t l 1tc;� ye ,::\ 1'� ~:; 194 .1. .:"' nc! .1 94:?, t. h f-:~ .i nq u.i. r �y ~:. h.i �ft:.f:7�� c:f �f'r�o m ''v,,l�l r:�n \Aj ,C<.<::i thE~ F"f?2 t.l .ll'' n dUtc~) 11 1.:.0 1 1 1-'JI"'IF:�n , .i.�f i�:lt ,;~] f., "''"~!::; p 1 ,;, in t ..i. �f f r.. c:;~ qu .i. I' ' Fc�c.l t .n vJ .i 1� l1i1D 1 c:l o n t . I-IE' I'"Cl';' c':ilti E~~::; .. ThE� "~!Jh E'I1 11 u f t .hc'' tn i:itl::. f? l -� ~, not t h��'.' ''~>'J h o'' D l " t: ll �-~ '' \�JI 'Ii�:l.l . ' ' \�,l i::, �:; t l ,p po i n t o�f d .i .s-, putt:?. D.r1c1 ..i.. nqu:i. t"Y hE�'C: <':\l .l "'.r.~, '-"'� '''; r�p :-;t.\ 1 t:. n�f h l c:' c:: k .i nq pt��u c: t 1 �'Wl i::1 :i u n , n o n -� nc~f:'i .i. c:l E~ n t. ,,,, 1 i c;>. n <::. ~�l f.�?. r� p �for� b:i.dc:I E' "l 1�� :.i.qh�\ �. t.o ��-r::~ cei v f:;' or- cl.i.~;pCJ �::; e of royaJtjes clu e th em und er contract w.i.t:. h c or.. p or� at:. .1. 1:) 1...1 1�,1h .i. c: h h t2 1 d 1 �.i.. c:: r.:�:� n �::;1:;? '='� u n 1 I c:� r� a l iens' p a t e nts. (L.D . Caulk Co.. v s. Un i t ed Elto:t t. P""� .1..1.6F'. !35~.'.'.i~ El110. ) H t �..:� t.r:� d tJt.f"'!f? I"' WJ. Se , th�:~ qU 0?. S t.inn E:I S t:.CJ ~\lh E�~ I'i t.: Cl l>'l.i.thhold thr:.� 'l:.i::l>: �f1�� om 1:.h<.? .1 94 .1.. r.J.ncl 1 ,.,? ��~ :? I'" D V ,,. 1 t:. .i P C.', d I" o~:''�F' h (;~c i�'1U !'': r:� ~ ;.:�, I t ho1...1q 1��1 '1:.h t-~ r �o y<:l l t:. i P!3 He l" f~ i::\C: C:I'" U C> c.f ..ill l: ll fi' p l C~..i.rJI: j �f f . c:;:. bo o l�::r..:; .in J. 74 l. ,:,mel .1 94 ',? .:~ ~:; 1 L7~ b .i :t .i t y to the non --� t- Ps id f.?n t 1 ic::E~ I 'l<:S OI'" !5 , t ht?. c.;c:,, mr:' could n ot. he p a .ic:l or.. l'"e m.ittr.;;d t .o tl �1e l ;::,tt.e�~ r� C::\S:� a res ult of ~ bl oc:ki nq proclamation. T h e Un :i. ':.E~ d C nu I'- t . I'' IJ :1 f.-? d 1:) 1 oc: k i l'li.:J l .h .::\ t v.J hr: I' T~ ~ 173

DECISION '2_�(?0 CTA CASE NO. - .1. 0 ���- proclamation~ n on-res ident "fnl'"�h.i.ddc~n l'� .iq l��,t:. to r�ecr?.i \lf.�? ot�� c:lispo�:;c-:? o f r � ny ;:~ J t.i.E~S dUf? l:.hPm \.II"Hif0t��� C CII") Lt �.::H: t:. \" .i. t .h c:: 01'"� po ,,..''' t i ~"JI ��, '"'11 .i c 1�1 t�,c.:=.:� l cJ l .lf"lcJ L'I ~ al.i. r::~ n s' � p ;:;,t.c-::nt.::s , ~5\..t.c::h .::~ li. E' I � ,~:;:. l �li:~d ri o 11 g Cl. .i. n s , p r� o f .i t .s ,,, n d i n c: om L" 11 1-'J i t:. h .i. n in t. P rn '" 1 ,,..E~v , :.-:� n u r,~ ~''� t:. "' t".u t.E~ l,..,,o, o u :i. r� .in q <-"1 l l per-�~; nn~:; rH:~vi.nq contr-�n] ~ r�� pc:E~ .i.pt. , c::u sd : od�y, di spoc,:;;,:\ 1 u t��� p;;,,y mPn l:. o "f f:i.):l�::!� d or�� de t<~ rm :i. n r.:�.h l c~ ;:�n nu .-,, l o ,.. p1�'1� :i.or.l .i. r:: i:'l J ~:t ~'~ in '"; . p r�� u �f :i. t ~:; ~~ ,:;,n cl :i.t ., c::orne~ n i' :��, r\ v n l ::� t �,��-� l���p:=;.i. d e:o� n 1.�:. <:'1 1 .i t ? n t. D ~-J :.\ t. t 11 �,n l cl t: 1' ' :-~ ,:;, n r:I , �t� I; .,.,, r� C? f o1 ���-? ~ r�,u nr::.~c:e ';~:; .:i. t:.y of fil.i.nq v. :i.Liihnlcl .inq L r.~ :-: I'""Ptt.lr�� n d I�? Vo 1 Vf.�?d n n c or�� po ,,..c:l !:.:i. on \fJ 1�1:i. 1 t:�~ c:: n r� pn ,,.. '" t .i. un r E.' t:. ,::\ i n f.-~ d b 1 o <:: k E' cl r� n y ;:;, 1 l . i.e~'"� � The n r:~ t t r�r.o~,; u l i. ::;-, th a t . t. I���,E�' o b 1 .i. q '" +: .i.on t .o ~�J.:i. t:.h ho .1. cl and pay the l:. ,;~ :-: .1. :::; upon i") i::iy tY1:> n t or r� Pm .it: t E~n c: P of t. hE' U n :i. !:.eel ~:; t "''�;__ ,,:.~ <::; d E� 1��� .i v p cl income t.o the non �-�� r�� r::� ~:. id~:~nl:. r� f~c:.ipi.ent. BPc at.I SE? o �f .i.l":�:; ~:=; t. r� onq ppr-~=;u,:�,,~::;:.i.vc� "fo1���ce, i �f not. c:o ntr-�o:t. l.i.nq e"f"f'E=! c:t:. ~;,,, cn-�r the pr� e~:;E�nt. cast=!, \o'le 1-'Ji l I. quot.r~ a t lE!nqt:h "f'n:J m t.ht~ dPci ~::; .i.on. ll "f hE~ cmur:: of thE? ot-J .i t.hh n ld.inq re~ ir~ment on pl 0i n t i ff .is inq::JOSE' d by !3 J4 :~~; ( b) , J. f-1 . C. : J. .l 11 r.:: er��~:;on 'S , * * *in ~,,,..l<7:i tE'V f?. r- (.") c:.::~. p .::ic: :.i.�t �. y Jct.inq, h i, 'linq the CL' ~::; tod y~ of c:ontr�oJ, * * * n:~c r~. i. fd. ~ d.i.s-,po~:=;,:, J. , D l'- p ,:, vmc:! n t. �f .i J<E~d ur�� dE~ t�;~ ,,� ,n :i. r�i '"' b l {�? r.�:\ nnu .::l l or�� period:i.c: c:�l l]a.i.n s, pr�� ofit. s ~ ,::~nd * * * .income of '"ny n o n ����� r� E~~::;i d ent * * * a.li8n s h a l l cl e cluc:t and lo'J:i thho l c:l �f I'""CH Jl ~o UC: h i:'H "l l""ill i:"< l 01'" * * *. pE�r�iocl:i.c:.:,, l q .,-:,.irl s::;, pr�� o �f' i. t <;;; , and the .inc::nme .:~ tr.�n: 11 Un whelP, th1 s p rovision d oes not c:onc:pr�� n .i.t. ~sr2 lf i'J.ii::.h ''v,'hf::~n '' thE~ \o'J .i t.l1 h CJ 1 cl .i. n q ~; h n 1.11 d t ,,,I< e p ] a c: f~ � F:c-,1t:h1==r. , .it ::;i mpl y ''' P F'c::.i.fic:!:::. 11 \fJh o'' shall do 11 VJh c.,t" . H cwH:~ve t � , th:L~:;; mt.1c:h 1 i q h t :.t t dCJ {'~S s h ed.. Tl �iE' duty t.o 'tJ.i. tl1 hnld prr.:! ~:; u p p o <:'- Pf:"> t.hf:;~ P>:i.stencf? of " an nu ;::, ] or� 180

DECISION - CTA CASE I'. . . . . ;;i!.~g--o l l --� pe r�.. iod . i.c.:~ l q;:~ins~ pr-�o 'fit~; , a nd income " � T h E�' !SE~ c t:.ion d .i r-e c t s t:. h r.-? withholding from s u c h sums as a re .i c:J pn L.i �f i <':1 b l E;~ r.1 !"; '' q ;,:-~ in ~"� , p I'"O �f :i.. t !'"� ~ and irlc:nme' ' o f ttl�:! nc 1n r-l?s;:i. cl e nt. <~ l .i.r:�? l'i, Ubv.iou !::; ly~ i f t. hr:> r~l:? ,;:I I"'E' no s u.c: h ' 'q,::~.in ~:5 , pr� n f .it~-:; , a nd inc:oml? '' ~ t. hE~ d1. 1ty to v1i t:.h h o 1 d is nun c�;: :.i.!::, l. r;~ r�,t. , CJn t. l 1r:~ ni'.J,r:-� t��� h E:1ncl , i �f LI"I E~ r� E~ .:H" E~ !::.u c: h su rn<s ,;�-,. "" :i. l '" b 1 r:~ ~ t. he :;:; L,,,, !:.1...1to r.. y 1 icl fl q 1.. 1<::� CI t!" i ,,, in c:u r ,c: l U f.:. :i vr:~ .i. r �, c!E'�c: :i.c.l i r 10 '' I.,Jht-:~n '' th e vJ:i..l.hhc:1lclinq dut y �''I I'" C:�!':> c:: . J c:lu not CII""UUrlci mo.,; cff?C:i!S .i.Oil on ,,. ny '-";ubt. l e \:.�y CJf c::o rl ~'t r.. u c: t .ic>n, but I �:lo t:\d'-/E-r-t, .i..n f .::H:.: L ,, t o :i I. . vJ F~ I'" C' t 1�1f'' l I"" ("1 V <''I '\:.:.i. r::� S 11 CJ i:~ :i n !!: ~ pr�.. cdj_l s , ,:;. nd :i. r1 c:DmP " t:.o thE� r , ,._.. ,. al.i..,,:.~ n <::; Doqc� i ':il '! d clr;� VJhi. l E> p 1 a.:i.n t :.if �f r.. r:�'~ t: ;," �.i.. n!::-d t. t 1r::�m undE!I'' thF..:>~-::. P c::.i.n:: t.l.f1i!::-, t .�::~ n c E>"=."::� I think not:. upon ~ reali s tic:: vie w of th e m ;::~t.t:.E: r.. . Th e:-:~ b l o c:: k.ir1q Pl"� oc:l;.:l .._ rn.::1t. i.on pl uc: I: Pd n ve r�.. v ,.,, ] c mE�:nt ']�f c:ont.r�. o l n vF�I'" th e:-:~ fund f::; fr�� orn th r-:-:~ 0:-1 J..i F~n '!:; t.hPOI'' t�:�'.�t. .ic:: .:�\1 bt..l.f "lcf).p o-f o 111 ,..., E�: r. s;l-� .i. p ,,..i q h t .!::; , T l'l :i. �::; .1. n s~ !::: 'Tf f.~ c.;;::" (':11"1 C' E Uf r' I'" .i.. V i"l +�. E~ CWH'i E? r-�~:: h i p oc c tl. f' ,,.. r:.cl \o',l h.i l c? I: I�;E! ,.. n .}":.,-, I. t�..i (�::-: .:;; "�'E?I"' ? s t .i l l .i.1 1 p l. ,;71.:i. r�, l:.i. f f ' s; p c::.<::;�::: e~:;~~; .ion ., r,;i.nC: E'� t . h �~ b J. oc:k .i. IICI 'fr"C'!�?;�: ':�?! ii\ pp.l.ied to � .in d :i. v .idual C) �f El ~�li <:~ S n .:~ t .i. c�n "" l ~:s � (.',!:s r.:,non r.-~s I'" DY �'=' J. t..ier,; ac:cr�u E.� d t �.o t. h ~:?. ,;-:, J. i. c� n "'" t.\r.,dr:.:�r.. th r? c: on t .,,.. .::'1 c: t ~ t h .i. �:; r:: ,.....:-� ~: y pI'' E d .i C: �'' fll fC:1 1"l t �f i:)C C1d li �lt::ofll : 1':. hF~\/ J�lii d �[� J�, �'�'U I-"' F1 t .i C: i:':\ l r� .i. ql tl.:. tu c.o l] c(: l: \'.hE? 1� <: 1 '/ ,3 J. +.: iF! <;:; but VIe r " l�:�? f U f"' i.J .i c:l cl E' l'l r� :i c:t h t tCJ rec:c�:i. v e t .hE�m o r.. d.i. <:=:pos'.f?. o �f t.hPm. No econ omic: adv a ntage wa s t h eirs. Such a h ollovJ ''r�.. iqht '' c!ot=J!:; not:. h avr.-: thr? cor� p 'of bE~nef i. t. su f f ic:i.F.�? rlt. to c:n n!s l:::i. t.ui.:'.E� ''q.::-~i.n~; ~ pn::lf i t.s, .::~ nd .i..n c:cHTtt0 " . F: v r?n the ub iquit o u s doctrin e of con s- 18 ~

DECISION :25~() CTA CASE NO . - . . 1 2 .... l x �u c +:. i ,1(.,., r��r' 1~ ,.., i r' I� ~:' I :i r rr:� r "l"i'"�~ h <~ �::; 1i u t c-~ n t ;" c J r~ I u r-1 0 r:.-~ r i �:J r .r. q h +� n ,,. ,7:' ,::\ C: 11 t h FJS;t:~ f' Cl 'y' Er) t .i.E' !:;.. f~ f " n c~ IJ � .l (> :';. ~ ~3 1 9 ���.. 4 �.~�~�..�:? . t l s ~:,.;-:\.i d \�J i th l'"e fe l'� e n c:: e to s ~?~?��� � (h) ( :? ) ~ I . l ~:.c .. ~ in Indrr �;:; tr � L ;d T n.t ~:d.. Cu.. v. Br.. ud E~ ,.. :L c:: k .1. c :\.r.. . ~ <t 4 F. . :�z cl 9 :2 7 ~ at paqe 9 :~; 0 ~ " T h n :H.Iqh u u t t he F~ e v t:�~ rn.l �> L.. c:-r \�1!3 t h r~ ~"~ o I' d ss q <:l.i.n , pro fi t ! or i n com e mea n a n act u a l ~ f ~ c:: tit i o u s g a i n * * *, no t or p ro fit 11 i C::e 1�.. t". i). n J y . t. l ! i;>:::; �~ 1'1�~ 1�� e n n t . " i nc:: o mf.:' " ,., n d , .i. f " I.J r.:-~ :i n ~:; ~ I.H�- p r�� o �f :i t:. 11 ~ \!�Jf :! r��E' u 1 �1r� E~ <�~ l. .i ;' r-:� ;:1 .:~n d t� i.c1h l y ..,, ,... t :i �f .i..c .i :�~ J. . F u t..�+� hr�., r� !, th r.: 2 i. t�:'�! n ":; h E' I'"E:! h D.c:l no p o\�.l�:? t�- to c: om mi:~. n d p .:~ y mt:-~ n t. t o t: h e rn :::; r.~ 1 v r.;~ s o ,,. Dt h r�:~ I'"<:S ~ unl i k E> t h e d o no r��� of t h E~ .in t E�' I'"P ~:; t r::: n u p u n r:; .i. f) I�IE-:! 1 \' ''"''" in C:.l v. H u t��::~ 1�., :5 .1.1 I.J .. H ., J. .1 :? ~ ;;~ t r).::'Cl e .llH ~ 6 1. H .. C 'I . l ll 4 ~ J <l! ~ H ~:i L . l~: d . 7 ~'i , w he-~ ,... ,.,-~ .it :i. c; !;; i:\ :i. c:l : II T h f'? pO \.-'Je ,.- to di s pose nf i nc o me is the e q u.i. v <:\ l <~ nt c:J �f O l.<oJ rl f7~r.. ~; h .i. p o f .it . " It� \o'!DLi l d ~::; e Ptn , t .h E~n ~ t h r:=~ t�-c~ h �? .i n q no 1 1 Ci i:~ i.1 �1~::; ~ pr. l :~ f:i. t.�:; !, D J'" :i. n r.::u rn P 11 c.1 f t h <�? ;;1l .i r,~ n s ;,:~ t:. l l:.> i::~ ~=; t: cl u r��� .i. n <.:J th e time pl ainti f f r eta ined the i r b l n c k F' d r-oy2 l t iE! ~:::, ~ n o r�J.i �t l 1ho l d.ing d u t y d r.-?" o l v r:- d o n p l ,;d .n t :i. �f f .:-111 cl n o p<�? rli:=~. l �l �.iE�~::; 3 1'" 1"' r:w �o pP r... " t1q,,~ .i r1 ~::~ l: t:. h i ~::; I: )<J c k cJ J'" O P~ t. l l(�:�:~ s:i.t u at.i n t�l h r?r� f-~ p 1'" 1;-~ ~::;E'rl t< =~c.l , ~\' h .i J ~ t: h r..! r� u y ;,;�, 1 t y .in t . h E~ t:. i:H ll CJ I.. \1"1 <Yf F' f.:,< ;> , ~-/;:' l]' � 00 ( ,;.\ l t. h CH .\ CI h l-'12 S S'>P t . U p .i n t� h r:' bo o !:: �::; of p e t:. i �!�. �i.o n r? J'' 01.::::. i'l l .i. i:'\ b .i l .i. t .v t: o EJa y er� ) C: 0 1.1J cl n ot. h F� r�<;~ m i t t: E' d to H ,;,,ypr��� du e t:.u C c~ , -, t:. r- ':':1 1 Di:i n 1:: ,... E�~::; 1� ,.. :L c t. i. r:)n f::; ,,, t:. t h ,:-, t n t. :i. tn f.~ ~ ~� uu 1 r.l n o -1.:. c r� c~~ t:1 t c II ,3 .i. n r:;; ~ p ,,. o �f .i. t E; u ,.. . .i. n c o mf.�? ' ' tu 11 on ..... 1.... <'? ":; :i.r:l E'n t f Cl r ( ' .i q n c: n r� p o ..�- r� .:-~ t i on B<.:~ YF' ,,.. � l\l o <?.r:: u n o rn .i r : h<;�= r 1F� f .it. s \Al e I'" C0 ci E? r � .i. ve d b y El i:1.yer.. ; h P J'I C:(:", t. h i�:�~ I'.. E! w.:~ ~=:; no i n c o me s~ u b JE~ct to �.-; it hho l cl .i. n r,:~ o �f t:. a >:-. ,0\ t ...� � s o u rce. Ac co r dingl y, p e t itio ne r h ad n o dut y to w.i.t.l lh(:! lc1 <'=l l l cl p .-:-1 y th e t. ,3 ;: . 18~

DECISION 2:)8'0 CTA CASE NO. - '"' l ~~: ��- F VE' I'l mo r��r:.:>, ,;~r:lu n t E' d I.:��a.'::' i ~"- �f o r" �t.i�i c� d E� ci~:d.on of the:-' Unit<'.� cl Hl:_.:;,t.c~::; Cou 1� t .i ":; t h E? 1 <-::-� q :i. ~:; l c:,\t. :i. vc~ h .i_,:; t .O J'''y' o�f ~3r:' c l �.i o n l '1:S(b) u�f Un .it:.P d ~3tblt.r~ !:; T ,3.:-: Cod e-::~. fr�om �,-.� hi e:!--�, Sr:.�ct.io n ~) ::'!: ( b) o-f ou I'" N ;,:~ �\�. i Cl r �, "" :1 l 1�1 \�.'" r-- n '"' 1 HE� v �-:��r�,, tP Co d f:::> \o'JC:~ �:;; p1�.. iJ C 1��. .:i. c:: a ] 1 v c: up i. ~-:~cl , <~nd I 1:i r l !: s; d 12 t� :i. v e e! t �f 1��o rr1 1-l Q p� 11->J .i <o: r�r.-�d r:> v- o n nu nc r:.:! mcr �o1:� ~:; of th e Llr 1i �l:r,, d !3t. ,,., i.. E ':'i F: ,, r �;:.:- ,:'�1.1 u f Tn l:r~ r� r �,;,:, l nc-?v r:� nU E-' ,::, n c! Coo.,I,J'"t'S ~ vd' l i c..l �r c1 i ~'"- !'~ I ns!? th ;:d _: d u ty o �f ll-J.:i.t l-lh o 1c:l .l.r� CI .,,, ,.-i_::i �.?~'; c:\t t:. .i mr;? o f r~_.::\Y.fll_f~EI.t... \.tk~ q l.l C) t �-? f ,... Cl m l,. ~ .P .� -L>n I l.L : s ��p,~p�:;r.:-> nt t<t ::';. (b ) , J .. n. c . , i s t: r-i:!I C: Pd b -:~c:: k to ti -l E::� net Of Oc: t o b r.-:.� r- ::';. , J <t 1. ::'!: � F' r.;, r- .::� c1r.. ,-,,, p h <::'- D .::~nd E" 1:1 �f t . h �,\t:. {)c:: L ,.,,, ,... ,., p c; 1�� t:. .in e n t . * '"' P a r� ,:;,q r- .::1 ph D p r-- n v .i. dE:-~ cl : '' r. t * * * p e r- suns 11 h av.:i.n q thn contr o l , l"' f.'J C: E-: j pt. , c:l .i .'0ipD'"'-i'IJ !< c:>r � f..ii.l ',-'ITH?.-~f"' 1�:. C1 '!' 'f :i:-: E� d <:>1' t::IE->tf:?r--.-ni. n ; ->1:.:. '1�:�:, " ' ' " .''-- ' i:~. l u t� p E> t"�.i o d .:i. c: ,,,, 1 r::J i:':'1 j _n !:;. , p ,.. n -f :i. t !'' , and :i. nc: u rn <-:~ o �f �':\rl C> t. h t'?. r � p E' ,.--~;o n c,; u _b j ec: t to t,,<:-: , r::; h <.1 l:l i n b e h a l f cd ' !:'i u c: h per so n d e du c t:. 0n c:l wi th ho ld f r o m * * * ' -1::. h e P �'~ �r�mE~ n '\:. <'-H l �':l lli C"..! n t F-' t'.J\ 1i v .::1 1 r;~n t. t u t .l---of? l"l O I���n i ,;:< J .i t ! C:U fl <F~ \:i~ >~ r� Pr.�~r-- .-:-�q l�--,-,;�,p l ; , -;�f t1 �1r::� "' �'�mr -! net. i r1 * * * p a l'" �\�:. <,; p<:-:-!c:: i-t' .i. c d :: " (~ 1 l (I E�1�� c:>CHl !'.:- h a v i nq tha cont ro l, * * * r� r-~ C:f::! .ipt., c u s t c� d �'f' , clis p n~sa l , cw p ay mE-' n t:. o f cd:.h e r-- �f i :-: E.' d C:H'" d e t er--rn .in c:, bl P .:~ n, --,u ,:;, 1 q .::~i n <,~, ~ pr�o f i l:.s , r.uH:I :i. nt::o n.t-:-: cd' .:;. no t h e t-- * *- * per <:; on, t:~>: C:P f:?d .:i. n q �t;:::; , (l r) (l �fo l"' ,:;;,ny t.a:-: .::l b1 t-? Yf.?<::t l'" \' 1i1o .::~ I'" E; l~ f? qU.:i. t'"l:;-: d to Ol i::l k e EHl cl l " f.'~J"l df.'~ l'" c":l. * * 1'" �-'~t.UI"' r�, ir1 b e h,3l f' CJf <31 'lCJt:. hE�r�, as prCJ V idf?l :l h P I'"E~i n, :t: F.'I I' ' E:� hel"' f? by a uth or i ~e d a n d r e qu i r ed t o d e du c t .::~n c:l \'d . L h h o ld f ,�� om ~:.uc h .:ull- n .I,-, l pr--o f .i L�o; ,, ,;,,n rJ .i.r�,c u mE~ �:; t\ C:: I�'I * * * I�J .i. l 1 b e:> !,; u I' f .i. c:: i e r1 t . t o p .:~ y t.~l f?! r�1<:J1,.. frl C:l 1 t".~::' N a nd they are eac h h E� n ::.' hY p E~ r- ~:; on c:l l 1 y J. i. .::~ b J F' f OJ'" C.:i i...I C: 1�1 t.o:-t >:. " F' .:-~ 1... aq r� "'' p h D .i. ~c- c~>: p 1 .i. e i t i. l"'l ci .i. ,... r.:--> c: t .i. n q 18 3

DEC I SION 25gO CTA CASE NO. - \.'J.i thi�Jo :l di n n f ~-�u ;; , t h E~ '' t p ;,:~ y m c! n '' \.'lhil p j t.:::; comp a nion s ec t ion a l.l t. h C� I"' .i. Z f'!! <>. i::.h E� d e d uc: t ion ,;,~.nd i mp us:.r.> s pE�r �~:;o n �'=I 1 1 i ,,.,, b i 1 .i. l:. v o n t h e~ w.i.t:.hl �,o l cl.i. nq c":\ Ci f.? n t:. . I 11 :i.l:. !:C� F< e po r��J:. t o t il E�' !���lo u <:;<?. CJ f r:: e pi'-P!5F! n "!":. o:\ t .i. VE:?~:; on t:h e Hi 11 ~ �1.: h e� C nrn rn :.i. t t: er? on \.~J ay s e:1n d t��i ec:.n s; s; 1"i. d ,, � � r:�r�� oh ,;,~. bl v t. vJo ����� t�. h.i..l'�� cl �::; o �f' t .h P :i. 1�� c c �rnr�:~ t , :, ~~ p l-�o pry:::.f�:::� r:l i-":l.!S l .. o .i.. n <l.:i. o.,�:i du, �� ! !"; ~"' C"� ll .l �.1 be cJ r:::�d \.I C Le el E1,..., cl 1,.1:i. t�. l-ll -,r,: 1< .1 i:~. t. t I l r? S O U 1'- c C�? 0 f t h E! :.\. rl c: om c:~ E� fH:I pai cl i n * * * fu 1 J. t:. u t h e (3o v l:-? rTlm �:~n t ,. By t h is; me t h o d t .h f? 2 m o1...1n l:. Cl f t. <3 ~-~ r dU E~ C'�r � t 0 bQ C: Om C cl I I !'c' 1..1 Cl rl E-'VE' I'"Y �f .i. >~ r-? d c::� r� d r.;� \-: !" r� m:i r�, t t 1.:� l !�:� .:~ n n u .::\ 1 :i. n c o!nr::' i '"� 1-,1 .i. I� h h e-:� �1cl c<11d r ��':\ .i cl l. o t h E� nu'/ C:'�I' l l fl'lf:-~ l 'l l: It{�'! fn r �E::� I.: h e:� in c OITl F! r� �':! .:~ c: h c:-!c,, t �.1�1c? l: ,,-~ :-: 1::. ;;< '( �-? r '' .. I�lr.:l n r� c�f:~ :.i.. - - d �-:.> n t:. .::1 1 .i E~ n ::; c:\ :. ; I��JP 1 l r.-1 "'; c .i. t. .i. ;::: r.~n s ; 1t-1e r- e s;u hj PC:'!: l:.o l:. h i''" \.'1i l l �, h o 1 d .i. n q s y r:; t .P tn .. I n t .h t:.:1 J_C:i l_ b Ac l . ~ 1-'l i:':\ '"' r� p .;:,y� r.:tq r �i::i h [) J' ' C? p r::~ ;- �, Lr~ d !:c-E'C: t .i o n B(d ) \ .tncl p t � ~:::- i qn i 'I' .i.e ,;,\ n t hE~ E� r:l .i n q '' F;:F::� t:. u r� n !::- '' � F'ar- <~Clr-- ;::, p h E~ as quo t Prl, wa s r� e p e .3 t e el .;:,,; sec t i o n 9(b ) und er th E' h E��i:':'�r:i i.nq {-k l �n.i. n .i. !;,. t r� .:�,\ t .i.o n" � B y t .h e r~:E>v E~ I 'i t..l (�:;) Ac: t o f 1 917, p 2 r aqr-a p h 8 ( d ) of t:.h e .1. 9 1 6 Ac::t ( pa r- . D of th e 1 9 1 3 (~ ...:� t ) \' l <:':i ?> ,-�e p e i:l 1. ro�d c:, o '"'S to 1'-- e r �. c:i ("'r� unn E� c: r~'� '"'�"; ::1 1' v c;, n y ' ' v1.i. t 1�1! �Jc' l �:I :\. n q c:':\ t. t h(-2 !::,q u t"�c: r:-~ cd' �1::. l��,c::- t-. .::1:-~ d u e c.tr�, p r�of .i t. '::> D l'.. i n co mes o �f r�e s i d e nt t.,::\ J�:ab l (~' pE! r� s; on s ''. Infn r- m.:� t.i.o n ,::\t � t he ~; or ..1r�ce vl r.:t.s ~5 ub s: t:..i tut e d .. A c co t�" d .i. nl~ t:.o t. hF~ H ot.l ~~ [:' r;: t:.? p O I'" t ~ t hi s c: i �l r:\nqr-:-~ ~'-' '"' s md c:l e f o 1��� ��,,, mn r� e e � f f l":? ct :i. v (:~ .::~ c:l rn.in . i. ~:; t r � r.; t.i.o n u f t. h <:-? 1 .:,\ lfl'' r.:~ nd t h f2 sF:\ v:i.n q o �f .::l n noyc:~n c:: E? ,3 n d f.-?>: p!? J'l !:c� E~ to t I If? t. "' >~ P �"' '-,fi�:�! r- ~; an d

DECISION CTA CASE NO . . . 25"'80 J ~-~� ~t-l.i.t.hf �lo l dirlq ,::~qcrl t".~=-'� ''. [{ ',' t he r;;; (;i,lfl(.':� A ct:., p i ~t"� ,;:�,c:JI'- cil. ph q (b) r.rf 1: !) (0> JCtOI_f; Ac: t . ( p.:; t"' � F <Y f +�. hP .1. 9 J �::,: () c: t: ) ~\1 ,;~ �::; amend P cl tr:� J. �i.m.i. t�. ���J:i i h hc � l cl.i.nq ''\ t th E� ~:�; ut � ,... c f�~ tr.._. n r:�n I'" E''�.: :i �:�1C:�' tl ~:. a l. i. ~:� n �:;. � Th e (ic: t fu t � t h r:~� r- i.nr: ] 11.dt0:d .i.n t E�I"' E~ ~:..;t �f r- C>rn t;::, ;.: .._f r.. E~r:? c: UVE�' n .::1 n t b r:> r..,d g;; ,,, s ,,, s ubj ect cf w.i.thholdinq . The F;:<�'�:�\I E!Illl+::� (~ct. o�f 1.'? lf3 rnc.~ d r:�~ no c:: h .::\ f lCJ E' in th ~? pr-:..~r.. t .i.rlE�t �, -1�. the l e n quaqe of amPn d ~ d S 9( b ) but c:l i cl :i.n c:: r- c <'il s�. C' t. h e ~..,.i t_ h h o 1 d i. r-,q t~r.~t. C') a r1d r-e nu.rn b c-� t'"E�ci �l�. h r�:;�� !':;E) C:t. .i .o n�:; i::<. !:.'. ~?:�.\ l . 1 -f c< ~\I E"/f�.:, t " , [� t Jl:! f' 'r:� po r- t C1 i 'I::. h E! I;Ji:\')'"" i:�l f'H:I f'��ft:::'i::t n �::: f.":orr:rt <. I� t<::�r�) C� 1 t. h E� l..�fot. l~:;r;� i i::i <:I~:: ~7; E:.C\ r �C: h .i. n i. t �:;., c umm E:�n t ''� on " Co J ] F~r:: t inn .::1t. t: hr:�:�� E3o t.u-c :.') " : "T h E� p ,,. o po�"; r,�?d h :i. 1 1 � '"' ~;:. und er.. e :-:.i s;t:.i.. nq J i::�t-J , r-(:�? q t.t:i. t'"E� r,; u nl v thE-? ~��!:i. lh hu :l cl.i.n n eli' .i.r,r:: r.:HH E:� in t hE) C a SE~ (') �f pi:'�' Y fi'IE'f l '1.: ,�,; h i' .i l "t c:l i.'�! �.i.d U i:'t 1 �;; , C:D F" f.J C'<I'" i::� 1�. ir� l JC:''� , .;;:. 1' '1(1 p ,�:� I' �1 fi C" I' 'C.::. h i p~:; O'f f .i. }: C)d ,;:; l'i d d r;>'\":. �:�:! I'' m i.n ,;.�, h 'I r:..~ .::� lll'l\ .t ,3 1 0 ,... pt:� r".i.O d.i �:: i::tl q .::l lrl ''; !, P I'"O 'f'.it r::; , r:< ncl .i. n c o mr:! t .o n u ,..,,,.. pr:;; .i. cl�" n �t. "'' l .i. E'l'l .i.nd .i. v i du a 1 s; or- non t'" l�? s.i.df"21"l t c:n r.. p n t�- 2t..inn:::.; '' " ' f' h i~:; r::DiltillPnt .i s .~\n :i.n<:l :.i.c ,;:~ t ion t h r:-? :.i.: r�, l:. r::'� r�, t:. n 'f Co n q r �f.:)S~~,; ~�1 2 r::; � '=~ s E~ >: pI'",,..,~;:. ~:,, <:-:~ d .i. r l p el,,.. i:'~ q r" '"'p h D n f l.h P .l r:;l 1. :::~ ()C t i:~l'l d Vl r::ls; c: ur� l�:. it'lt..tf.::�d .in !; 9 (h ) lTf th P .1. 9 .1. 7 (.')c t I�Jh e:� n th E' 1' o r-mr:! ,,.. p n :J\t :i.:;; .i.on � 1-'Ji::I S t�� Pp t::~.O'. l r~ d . l\ lo c h ,::~nor'0 ~'J 2:\ ~5 .i.nt ,.:;)!'"tdf} d t�li��, r.-:, r�, thP 1�1.i. t. J-,h o 1 <] .i.nq p t�- o v i s .i. o t�1�;: we r� f.:? d 1,� 1 i mi t .P d t. n <:1 p p 1 '/ u n 1y to nL � n :=�:;:..i.d e n t:. "'' :1 i er�,s . The l:. :.i. m E~ of p2ym E�nt ~.., .:.~:; th r:~ t:i.nH::) ~oJ h <�'!! n the withholding duty ar-ose . Thf.? r:.:E"I ef'lll E! Ac t o �f :1 9 ~':' .:1. ma dE� no .:~ m e rld rn r:~ n t .!'5 I:.o t. l �l c~ !::;r::.'c:: -1::. .i. on pE2t'- t ..i.nerlt t o .i.nqt.t.i.r- y ~ n ot'" d.i.d th r:! tk t cd' .:v=r;:~ 4. r-, l��l o~t-J E! v r::� bn t h t: he Hou se Report a nd the Senate 185

DECISION 2:J8"D - CTA CAS E NO. F: Jr-,r�� t . on t l 1r:0 1':?~;�:�: 4 ( !c t. l i ::\V (;:> t h i ~"; c C) I!Hn E��n t. : !3ec t io n 2:? .1. S u bd i ����� visi o n ( a) of th is sect i on of the nr e ~:; E~n t 1. ,':\ \.'l p r�nv id E��;:;. fu t��� th r:: I'Jith hu l c:l .�i nq o�f "-' t,;:.::�: , or�, f.i.>: E�d o t� d r~ t c: ,..m .i. ,..,;,, b 1. E:: .i ,.,�.� o mL'' p .:~ j cl t. o .::1 non r�� E� �:-, .i. (j E:� n t: i'l 1 .:i. L' n .i 1�1d :i. v i d u <" 1 ~ c.1 r�� a p ar tn e r s hip c o mpo s ed in whole or in p a rt of n o n res ident .:J l .ien!s . " B o th .:~J. ~s o t� p fe r � t-.o "r-� E~ qu .i t--�:.i . n q thE' v.l :.i.. t .hh u ld .i r-,r:t o �f t.;":-: fr�om P <'~',' fll E? nt s' ' l:.o <'~ p c':l l'� t n! ':� r�� �s h .ip. Ra t .es of w ithho ld ing we re .in c I' ' C:! �'�I~:; ~~ � d b y t h P I::;:E,:V~? n 1. .1r:: ric:: t . 0 'f .l r.r:-::6' C:.F ICI t hr-::� Co n f E:� I' ' P fl C: C' n E' P <:l l' ' t. n f t J��IE�: Comm.:i. �t�. t: r:-: c:�:�s:; r..1 f t I �r:� H 01.1.�::.c? "' n d tk�: l'l .:~ t E:� r E' �f F: l'" ;::; l .u '1': hF ' p �f i' cc: t 0 f t: h F�' h i I: F�' j I'I t" i'l t.. E' ~: : " T h .i o:;. a mP n dme n 1:'. n~� qu .i t��c!O> t. J�,c h� �i l: hhul d ..�- .i n t;~ u f ,�~ !:<�:\>: o'f l ? .1./ :2 ' ' '"''�� c::e n t .in r� f"�':', p F�c: t . o �f d 1 J. p .::> '/ f'i'"~ "l t of .inc o mr:�:' nt <.:l d E� bF? �f or�� e:� t ,...,!:-: F' l l i':\C t mP tl i . Cl f l:.. h J. s; (.)c 1:. to fc,l � (' : .i C.! I I * * C OI'.. po�� r� C:\ t:. .1. on:,; !''' pE)r:: :i. f :.i. c-: o: l b F� l. o ~,, . * * * * B P c: <.:i.l..t ~'' ~'-'' 1:: hE� pP r� ~::;on �:; illi'�'� k .i 11 q P �?.IY IIl E~ r.., L <:;; !1.-:.�d n o r lut i. c:E~ t.h ;:~ t. t h E:-: c:eo t� p o l'�c:\t. i o n .i n c om e t .;,\:-: wou l d b f:~ .i r�,c r� e��'. r..;E~ d ~ t. h f?. t��Ji. t. ~ �,h o l d .i n q r E:~t e .is; n c>t in t:: I'- E:as;e cl 1<.1.i t h r�E~f.:.�-� * * *" . p r? ct. t o p E:\Y fll E� n t~:; m ac:!r~ b c~ f c:� r�� r? t ~v:;:� e n c:lc tmc ni.: o 'f t:.h :i.<,:: (.k l:. ; t'1l t.h o u t ~h r.. t-:-~�f e r� c~ n c:E-> .i.<:; t .n �fnr�E�'.i qn c: o r purr t':l t .i.on s. ~ th E' w.i. t h hu lo :l .:i. nq o n t o p E1 Yfllf?. n t:.~~ t .h r,? m ) S~ b 1.1t: ,:�\!;; P �"' '�� t. C' f t:. h o:? <:::.d inE' s y <;;:. t r�'.�' fl'l 1:-o.rr �J�,,.�i:'.\ C in q i. n d .i. v :i.1: It 1;:: . l o:;; � I n t .h e R eve nu e Ac:: t of 192 8 a who l esa l e d e p a rtur �e w as made fr o m t h e arra ng e me n t of pr io r Ac t s . S 22 1 I::H:~�.:::,::Ifll P Fl .14 4.. J n cu mmP n -1:.--� .inq o n p i:\ ,... t . ( i:'l ) r:-1f t� l �oc: ':3r::-: r:: t:. :i. O fl ~ b oth '!". hE! I��IO:lU ::;F� f:: F' p 0 I'' t ,�~ r�1d l::.l1 e S E:: n a t .F: P E�r,or��� t. s; l.: ;:;, 1-..,::,� d : '' "l' t l!�;' pl'�p-- s ent law p r o v i d es �f c:o r� t he 18G.

DECISION :ZQf?O CTA CASE NO. - J l '" ~.AJi tl1ho l dinq at in c: <~ s.E� o 'f bor� d =:; ~ u �f "'' '1':. E:l >~ C� f :::, p 1�:~ I.. cent of the int erest 11.1hc~ n pr.:d.d tn * * * " n onr ~s ident ali e n s . I...Jn d c~ 1�.. t.hf~ r::c' \do��n 1.1': � () c: L n f .l 9~':.~.? , �1�. hP ~,;. E-~c t. �i n n ,.,, ;;1 �;; 1�� �:-� ; 1u.m h E:~ r E�' l .l :14:3 i'U 'H:i t h e:� r� ,:\ t.E!~:=. J.'.lp J'" (' i. I'IC r� e;.~ SPc:l lo'l.i t:. hDl..l t . i::l f f E?C: '1':. .i. rl q t hE' ,:;1 '':'� j:l E1 C t:. c ��f 1.::on side r....... t:. hf:�? p 1�� o v i ~.:; .i 0 11 und E-~ 1" �".1 t.i. UI"l . rf�lF� f;: r ''�/ F�'I'l l .l f?� (k: '�. f;> f ..1 �;�: o:;,l ll l c~. i:IP nu r: � J, ;:, .nqr" '"'� h c- ;:� J� .. .i.l'l '.�~ U !'\i> rl Ot.H " .i nq1...1. .i. r�y , hu L i:'lq i:':i in �.i 1�1 t: I IF:.' Huu o::. r:� F~: �?.pu r� t �. '"' n d i. n F.e 11 ;:;~ l:. E-' r:::e po ,... �t�. t" efeJ�- r:�~nc:f?.!':'. t .o 1�1:.i. t .hhuld.i.nn o f ta:-~ on irllE�' I'"f:?':ot. ubl.ic_l ic< \:::i. o ! , ~:; c.:o u c::hE�d .i.n t.E! I'"fll~':: nf p aymP i l L. T hr.:� 1.9 ::'!:6 {:l et' cl .i .d rlnt. c:: h ,,~nqE~ thr.~ t. f.:�~ nll~'3 of f::i 1 ,1.:::) d C:'. l: l �11;~y <�l'f �f f.:;!c: t t .hf? p ,...'o I::J J e m un 11 c, ,... :i.1�1v 1:~ o::; L .i. q "'' t :.i.on � t Ho~.Aie v t:' t'" ~ i:':l c: CHIHil E'n .i n l:. h e:~ Ek~n at:. f'? Report. confir ms th2 prior s t: <.~ t .c:�mt::�n t .~~- : '' Hc?c:: t.i D n ~:::2 u �f t. ht: P>: >.c.:; t. :i_,.lg 1 d \�'1 P I' ' UV.id F� !:i t.h ;.,�, t . t i"'IF! t ,::& ,.,.tj l". hi 1E>ld <.:~ t 1�.J �1E� r,:;o un .c� unciel�- <::'iP t. tinn .1.4 ::::: 'fl'� om Pi"' ';o~ m en t: ''"� to t:~. n indi v idu al ta x pa y er s h a ll be a cre ci .i.t a gainst s uch ta ~rayer's t:.:;~. >: " � F;: C' 'f p n o�' I"H: f.'� j_ s l m o:'l Si C)cl c~ C1 .,.., " ~~J i t: h h �.:::< 1 d :i.n c1 .i n 1. hE� c: r.~ :-:; t:.� n 'f p ,;,'\ y ... HI E�'nt. ":; t:o fo J�" E!:i.qn c or�por.. at .i o nr.;''. T ht:;> H ou ~:; E1 r::E1pOl'' t ~ I,Aj hi c: h the SE> n atr? c'ldnptf:?c:l ~ ('J rJ t .h!? r;:~::~ve nL.t f;> Act. C' f l c:;:-:;.7 i ~::; f.0qu i voc: ;:;, 1 i n s tating with ~ e 'ference to a C I''}C:\f1q E~ i ll ~:3 2 1.1 ( C:'\ ) : '''f~'l E�~I'- E~ \1-Ji 1.1 be lt�l.i. t: h he 1 d �f I' 'CHII thE? t. C.\11\Dl.ln S receiv a bl e by a n onres ident a l .i. e n t. EI:�:Pd unclr-:.-~r.. t l �le f'l!2 '<'~ pi'"C.:'v .ision~;,, t h �;> ;:unc:�unL o::; r �p quir� f?c:l �I u be i.AI .:i. t. l lh ~::-:� .1 c.l Ll nclr' l'. �,;; <?c: t.iur�, 1. 113 (.:<"!' the !H"' f:? ~::; F'f'l t ] i~\ \:I" .. _'! r;: F:'C: E' i '/ o:d::Jl r. ,. " � cd' 187

--- -- -- DECI S ION 25go CTA CASE NO. - lU c:our<::; E�, is cle sc: t��.ip t ivt':� o�f m.i.nt.t t: P c:!ivi "'; iun ::; o f t:..i. lll f ? �f ,. �nm t l�,r:� �f .i.I' 'S t mo ment. n f ac:c I' l..!.i'~ l t. o t.l "il'-:' l -':115 \:. sec ond b ~fore rece i p t of p .:,\ y mE~nt. T he H o u sf::! lie por�t o n thE! Revenu e Ac:t of 193 8 apne0rs tn rea f firm the earlie r inter pret- aU.nrl �::; eV f7H I .if t .h c-? J.<:jl :';] f;:e pcwt:. b E! \/ i c ~�~r~d ,,,, <:~ .::1 cl E.? 'I i a t .ion . In r"f? 'ff?r.. r.. .i. nt .~ tn con<:;Pnt d.i.�, ,.i cfencl ~.;, thE~ Cc�m rni t:. l':.�7.'1'? on vJ <:\)If-5 17.'\l'"icl l''lf.'.~c'\ r\ ~'3 r e pOI'.. t E� d �: 11 In casE.! i�:~ n y <::.h c.:1r.. �? �� h o Jd P I'.. fl'!i:'o kinq C::t C::U\ll:i QI"' 1'. :.\.'=: i:~ p !:~ r.. ~:;cn � l ~:; ub .i f:>C t \':.n �U H? p n :JV �i. ,;:, .i. O f'l ~:; crf s~.'? <::: !':.i c::or 1 .1.4 :::;. ( h ) <.:ll '\ cl ~'" E"C: t :i. CJ n .1. 4 4 , n ;:>l i'l L.i n tJ t u t h P d c rJ u c: t. i n n a nd ,,Jj. t l ih uld.i.nq tT f l". a :�: ,:.<1::. tht? <:'; CHJ r. C: E' , l:::. C C t. .i Cll'\ ~.? E< ( cf ) ~:.', I' l"?q 1..1 i. F"F' 1::; t:h1:d:. l': uch cor�,l':' t�.;;n!:. �f j . l c� cl hy l:: hr; * cn r.. put. �;,�~t:..iun ~�Jit:.h .:i t 1::i I'"E� tt ll' ., ., sh~;:, ]] h E! acc on :p ,�:,\ n :i. F� d !.� �,1 r:::,;:,s; h :t lfr: E'CJ U C.'\ l t.c: t .I'"IE' t i:\(1\f.) l.ll'l l'.'h :\ c: II thP cor por 0tiun would ha v e b een req uired to d e duc t an d wi thhold b y suc: l�l ;:;f.:~�:.. t.ion 1<1-;'::(b) or� .144 i f t. l�..~e ;:~ moun '1::. ~; p E:~c: .i f i. ed i 1�1 s u e h consent h a d b een p aid t o such ~"� h ,~ r�e h o l cl F::� ,.-� , on t h F! 1 ,:~ ~'i t. cl ;,~ y u �f the ta~ ab l e yea r o1 the co r� po r.. "'' t. .io n ~ .i. n c '"' ~; 1�1 ,:�,,:;. ''" 1':. E1>: 1::1b .1. !:;! d .i. vi. d E�' n cl � 11 T h �~~ !3E:�t lE1. t: E' r:::r:-; p n ,,.. t U ~; r::1cf 1::; ,:�:, 111 1':! .1. C.:\1'"1q 1...1 i':l Ci ,.., i. 1�1 1� ,.~ f ..... I'" I'" :i. r I Cl t.�o f.) 1 ' 1�::: ( b .1 1\ IO p P r-� t i n f?l"\ t C: CHTI IB!�?n t.: 1-'J r'�\ : :. fot.m d .i..n thr? Comrni 1.: t.P E:� F;:E.� p u t�. t:s on t. he 0 t. h F>. I" r;:F-' V E~ I"I\..1 P f~C t ::; cl C:H�\Ir\ to 1.94.1. ,:nH:I J Cf42 , 'i:.hP t.::n: y F �i:l l'" l!:� :.in q u es:. t:..i or.., � f kH'IIf:! \1 1:.:; I'" ~ on r? f 1...1.r � th E! 1r� tc> :::1 .1. ~~ t.E~ ,,.. com rn .i.tt.ee re por t ,.... c;:� �f t I c �~: .i.n q current t hi.n k.i.nq . Th~:;~ Hou s;.p Report on t h e Reve nue Ac t u i' 1. 9 ~:.<:, .i. n r�E� f f:?r� r-� .i n cJ tc1 <::1 p I'"O pc ) ~;. t-:;.> d 1. ~::. .1.1 < ~::t. ) ~> -~:~ c\ t:..:-?::; : ���r h :.t. s-} 188

.-. DECI SI ON CTA CASE NO . . . .2S"&'0 .19 ... o~ J SCJ pI'' D V .i. cl p<;; t. h i:� t . t >1�1 ,, PE' r��'0: Cl l 'l l'" cqu :i Y"E':d t .r::) d Qdu c t �. i�Hl d 1�1 i I hholc:l ,. , t. ;::, :-: Uf'l d E� I'" Si!:C�i:: l. �.i. U ll :1 1] ::'; CJ r�� J -'f � f ;t: ;t. t on t !;l r-:~ r:�,:�;,y fll E�r�� 1. c.l'f ,;,1 d.i.v.i. c.l '''~ncl :; 11,:.111 l lCJt bF~ ,.�cqu .i n ?.d to d~::-~ d1.1 c:: t:. r.:\nd ~-J.i l".h ho ld <�'� t <::,;: und c t... t:hi~:~ s e o::: t.ion 1.1pc'n ~=-uch p i:tV tnPnt. 11� HF2C1'��' ] ,,,. L .i. un<:: r"�l'' U fT I!J 1. (1 , ... l.�. e d l.:l y t h <:::� C:c:Hntn:i. :��o::� i Of':E.' I . c c�n \' .:�� i ,, ;:ti:J �.Incl.3 n t . r �� c~ f C I " F�:� rl<:: '�.:�:! ;; tn P�''lmcr �, !... ,,-.,::; i. r1 eli c: i'�l l:. :..1�1<.:1_ thE' c: r�.. yr::; +.: :,;, l 'l :i. ~~ ;�_,_ 1. .i. on n 'f t: h c 1<\t.i.t hh ol c:l .i.nq clut y . Tr� " f?c\~'i i..I I'" Y nf?qul .:~t:io n ~s :1..1.1 ,1 F; ~? 9 .. 1 11~'~ ....� .1 ( <:1 ) vJII .i. t h h C) l d :L J"i q (') f * * '"'� t. C~ t:. E" !o; : t. i:'< <3 :-: C) 'f ~~: o pe-?.t � c::E�nt. l: .i!':; r�.. r: q 1 Li. r�.. ecl .i.n -1:' he�:�? c:: ,;�,!::;r.;� of 'f i ;.: r.;,,cl or � c:l c-?t E! l'" lll.1. n ,;:, b l r-? a nnu r.,\ 1. nr.. pPr'� .i.oc.l.i.c ,::\.1 .i. r �t c:i'frl''�=~ P �':l.i.d *to a r �~urtr�..�c::-~ �:: .i d E�! II t. .~, :1 .i t ! l-, .:i_,., , I i. v icluc:~ l :t. .t ' 1 � "lh E�! ::: t.l h!�:; F.:c i:.i orl �o:. o'f H 2 9 � .1. .iJ ~) t?. t"' �:1 t I " E! p J. F.'� <:-? ~�J j _t h t"e ff.;:t. E"r�tc ;::!,;; t:.u \,,, i. t .h ho 1cl irH.:I upon p ':':I YHH':~ nl:: , !:'-UC:h E:IS 11 TIV~' 1-.tl>: fllUSd:. b C:' ~��d. '�.hh P l d a 1: l .l"tt::-: ~:;o ur� cc:? f 1� <J m th e: q ,... , �-: "'-' .-.~mot.tn t. u 'f <':11"1 y d .i !:: t.r j l.:; u t:. ion I rn ;::~ c t:? by a c ell�� pcH �.~~ t ..i c.m t ?"? � .:t 4 :::; ..... I * * * * l) ; :+: *- "'.1"1 .::trlt �;u.:d n:, t. t..~r� n =:; ho\�li r'H:! the:;: ;.~ mDunt c �f t.r.:~::-: r��p quir�.. c d t �o bE� h�i l�. hh f�' Jd fr�� n m e:.::tc:: h n CH'll'" E-"ci i <:.1 f.' n 1:. ,::.} .i r;�>n A\ l l t �::> ~'I h :i. c h vJ �'" .i ,.,c: om~:~ c t� he-? ,,. t. l li:, r �, .in t.t? r� E�: ~::; t. c,,. P�3i.d dt.lt " :i nq t .llE:: pt-�E~ v iot...l ~:; t .<::t >:,":\b l e * * yE?..:.\r� '' (2~~.JLJ.:3 ..�� 7); ''T .;�,1 ~ : 1-til:.hh eld r.~ t . t. h P s �:Ju rc: �;? 1.1pun ;t: j n c: om r;~ * * �� p ai d t~ a l ien n onres.i.d8nt f .i due i ; �11'.. i. E'~~�; :t. II ( ~.?9. 14 ~:! c;> ) � (.)nd E' VE� n on �Ul f? cp..le �o; �l:: .inn D�f whf;?t.hr?r'� ~tJ it. hl� lolc:l.i.nc:r �::;hou ld bE' io\ 1: t .ht:-:- r-�,;,,t.:e .in e f 'f !?C: l. ,::\ t.: 1.: l �tc:-'� t. :i tnf'.' t p i:'l 'y' lll E' I"l <;:, I�Je-:;~ l'"t;: ci�.l !:? Cl l'" t':'l t . thE.' f " B tc:? i 1\ e-:�:~ f f C?.C: 1:' ,;�,\ t t. h f7~ (:. .i me:: p 0:1 'y' fllf-cfl l.: ~:; L�Je r�.. e .::~<:tu r., ll v n1 _ qd.;:~ _, the l.Jnit� f:-�~ cl . ~:a .:.,t.c=,:~s Cou ,,. t n ..1l E�~d t h '" l:. th e�:> t: :.i mE' 1),;~ '.dnr:r �l t. .is, rna:1d ~-.-:> qo v er� n s; th e' r�a1:�.E:'. ~llt~ .:~ ct <:l :i.n qt t utc~ fr�om tl �le (~_.::\_171 Lk c.i c::~c i s :.i.on : 1sn

- DECISION CTA CASE NO . . . :z5g-'0 ..... ~~ 0 .... '' l]r�o t h E~ i !5 s:,u f2 o f 11'1 hP thE> 1� � 1'1 i. t I�; ho I. d i. n q E ho1.. 1.I d be� :J. t 1.:. h E? ,,. ,,, t !�?: .in E'� 'ff P ct <':It \:'.he~" t.inon r::.,::, y mE' nt �::: \o'J e ,... t-:�? t i u E~ o ,... "-' t t : h 12 1�� .:.1 t e \o'J I � ;�~ n p ,,_~ ym(:.�n �!::.~:; ~�JP r� p ,:,1c:: t:.u .::11 1 y m,;:, d !:'? ~ t. hf? Bur e~ u h as ruled th e t i me of p.3y mc:� n i: CJDVE~r.. n ~;, t.t ;r? r"i:l't.r::. . D.D. 1. 6 7 � l C � E< � l <;; �;: ; I .. T .. J. :'; 2 .1. ~ l --::! C.E< � .1. 97; I . T. ::~: o;,;' O� ::X: ') <? ~ C.B. 1. n6 ; :r .. T � ::. :? q :1 � .l 9 ~~: 7 ......1. ~ c . n . .1. IJ.o ~ Cf. I . r .. :::::5:::; :5~ 1.94 :? �-���.t. c. n. 1.~~9 ; I .T. ~;:!A ?~ 1 940 -- 1.~ C .. B. :"�EI. In f ,:�,, c t .., i ''" n c:JI..'.,;) q r! <": ;u f 'f .i c: .i.. <�::> n ! l y b ,... <v~ cl to r.? n�:: urnp '"' '''-s:. t �. l���oe pr �n : J I ;.;.~ rn ~'-' �'' '"� E� fn p 1 (") "y'E�Cf in F~ tl c; " 1'�1 .. :?i~ l.'..' �~.. ,, 7 ����� ~? c; ,. E~. J UFl (mcoc.l.i..f :i. nd Clli u t .l;r:;) l� t:ll'� o uncl�::. .in * G.C.I�I . *H:' i7 4~ 9-�.1 C.F<.. ~::. ~S LI): "* ,,,,:it.hl �on l <L l.nq .J �;; o nl y r e qo.J:ir� r:- d VJ h E!n ~'- ;t �~: j r, c: o mP -i.�; p a .i d tu c:�~ n un i'' E!<::'. .idr�:! n �l: �'I I l. E~ n E1lll l .:::1t . l.� i�;E! r.. ;,o; t~:? :in �fo r.. c:: t::? nt t i�l f? t .i. rnc> of p;:~ym~-:7' 1"l t., '' As in th 8 n bo v ~. s o U n u t hE�r�n P ac::if.ic:: R ai lr o0d Co. v. C . I . F-\ .. , :::'.1 F< . T .A. 99 0., h e ld t: ,... i':1 E~ ni' 1r1i tht1 o 1 :1 :i.nq ~�I I��, .i c: h ��?�f �f ec:t :l. �/P o r.., t .t �,c> d.:�.lt: E� c f .:>,c:'l'.u <-;.1 pa yrnF11�1t . In t: h.:o; t c t �. "' r~ , 1:. 1�1c�:� pet. i. t i. on :l. n q c:: nm r::o .,;:,n y 1:: unt.E:� r�od c:�cl 1..\fl s u cc f?'::.::; �full y �f o r .. �3 r�F:'!:::.u] i �. s .im.i 1 :;,\r�� to t .h E:' o r �1f? r�o~'~ l'"f! ~; ClUq h -1:. h �'/ t .h e Flu �; t~: rrHnc nt. . { il') ll d i . o �,t: r:-:or ~:-":� 1 . ci 1..1 E~ i:\ l'l c:l j.:�,,;,\ '/ i'l b .f. io�c� eli...! !'" :i. 1'1 q 1 ' �, 1. /.f......l C{ .1. �;: co ul d n u l.: t: t; t:> n hr::� t::Oi'.l.i d l:. o ,...,on r � E� ~::; :l. d !':> n t ,,, l .i r;�r; ~'; !J f.�:�!C: �':l l .t <:: P o f \�'~ �"' ,... r.. est r-- .i c: i�:. :i. on<:; .. I t:. t�J a~"- ~ i n f .:~ c t. ~ p<~.i.d .i n 19 ~? .1. �::\ n d 1 9 ::? ::)~ ,;\f Lr:~ l�- th~;~ V�li t. t �1�11 ::0 1 cf.i n q ,...r.1 t .E?~=-, h ;,~d br>cn i n c r �p i't "5f'�cl n T' l 'l F~ (.: t:� m P<"'l l'\ '�,� '"' ,.-qUPcl t .h f:? f or �mE! ,... ~ 1. OI.-JF~ t" r i.'l l .''' !:. r::.h o u 1 cl .:-1pp 1 y l:: � r:-~c ;,:11.. 1 ~-::- E! t� il P .i. n l..(�? r �c�<::. t II'Jd !'=- th e n due:; �;:. uf �fi. c:: :i. c'rol': �furlt i "> \I'JE' !''t?. .::1v c:~ :i. 1 ,,_, b 1 f:! a t "" 1. l t .i m t�?. ~:;; �fo r� i t. ~s p a ymPn t. ; F-1 nd t h r.,. d ,,, t.E~ o �f constructi ve receipt by the 190

--.-.-� __. DECISI ON 2.5f50 CTA CASE NO. - ::� .t. bnndl�lu id et�-,=; q ."'v c ,... .i. r::;r:~ t .n t�. hr;~ d t..\ t v of v1.i. thh u l d.inq. Th ~ 8 nard of fa x (-',pp e,':'<. J. !::. r-f::::� j E' C: t".f."' ci th t�:�?~;;L> ,::<FT JI...\In E~ I"l 1: ~:;, ~ Sc"'yir ,q~ ~?.1. E<.T .(.). i':\t P �' Clf:;> �::: 9')1 ~:; <;~r ld 99~:>: ''T he: p r:l' tit.ie< t l E~ r�s; d .i. r:l n o t. "' n r:1 11�1c ,... E~ nu t c .~ l l F-? c:' 1.I p n n t. o p.:~y t: h f~ i. rli". ~:! t'.. l�?.c.:;I� t.mt..i J ! ';' :�.:'::;.. :=��tid t 1-,��~� r' u n 1� P ~'"� �i.. cl f.:� r1+ ,, l. .i. c:�: �; "" <�1:i. d r �1.-::� :�. ,;~. nc:l fo :�� ,,,11 t .h c.�\1: �'~ r� p r:::� ; ,' ''" c:r::. ul.d * * *� n ut receive t h e .int~re s t u n t i l I�Hl E� n t l 1e .i . nt: e n?~:: l: thc'! n wa s ac tu a ll y paid to an d received b y 1.:. 1�1<"! b u11 c.l l -,o 1 cl r::� r- s; �1.: t l E�\ ' r� r::�c: r.:� .i veci .i. n c c:> r nc~ {�. i:''� >: ,.,, h :1 <:�! ,;,, t. 1��. h '::�' 1� � ;.,, Lr-:~ t�. h e? r1 E! f �f <-:�?c. 1:� .i . ��./ F~ � ,':\ l 'l d 1�: 1� r .' f ' rc�� I� �.i t � .i. C) n t:�r� '" wF~ ,.. t:,, 1. 1r .r IE~ ,... t h E�? c! 1..1 1:.'.� t l "f 1' ::\ �/ :i. n C:f ! :; t l mu ch t f��~e ,.... f:.�'Cl "f �'=' �:= h 'i 1:'. hr;:� ~::. t:.D +:. u. t: r' then :i. n ~~~ f "f E�c: t. t il PY 1�-JI�=' I' .E! r�- p q u .:i. t��� nc.l t.:o ~�J.i t: h l��~ o lcl c!i l�lrl P �"'Y � '' Ub l :i. qt. I L! s;upp o t�- t :i. c,:; t .h1.1�:=. q :.i.VE! n tn .:-:�. c:lupt.i on o �f the t .i. mE~ c:d' p ''' y mE:'n l �'\ !::. t. h ~;:~ ma t u t-- .:, t.i.ot �l pu .i1 �1t c�f t h E! ~AJ i t hh D l d i nq du t y' , p .:>.yrn !�?l.l t b e�i n q b o tf�l ;::~ 1 �1 r:::~c.~�:;, i .l. v r��E�cu qn ..i.. :;~.:�h lr:? a ct. o �f o I ' j 1;~ c: t i. ..,,. �~ ~~ i .q n :i.. f .i. c <~ n c: IO:! i:~ n cl i:'l s t an c:l .::1r� d "'; .=:~ f c;q LI E� ,... cl j , n t:l t h i':�' coll.E-! c:: t .i. nn n'f l:. hr.~ p t��op c r- ,,;,mount 0 f L E~. :-; � 'I vJ �=�' 1::. po �::.�::; .i b 1 F~ Cl r �Dl.Jf"' d c: ,;:,r�~ \..llE�~ r� r. h r::� I' u r� U 5 n C�t t .0 <':~ p p l 'f t D p E� t.: i 1'.: i. Cl rl E? r� t hE? I" U 1 :i.r1 q of the Lln itE�! d Eta t f:?.E:; FE�) c:f e J'.. <'I l C n1 11r t:. .in I....� D. f~.C'\.LI_tf:5 . ~ s; 1..1 p 1' . .:~ ~ "f 0 I'" 1.��1 hi C: h B i~ V 0. r� F' h ,i:\ lr m .,;,\ C f:?U t .:i.C ':\ :1 !0:. , [ n C: � , :i. �:=. !:':..:i. rn .i J. <3 1�-� 1 'y' !:; .:i. t:. u a t e d -~_, () d r.~c: :.i. !:; .:i. c� n but t.r� F ~= ;. �:=c r:;! cl b y 1". h E' J. a"'' , \1\1 h .i c 11 1. !"; c: l r> ..::= c:�' 1 y :i f n o t r? >: a c t 1 'l s: im.il.3r� t .o o ur- l.:H�J, r� e.:v::.;on an d l o q.:i.c: is not to b e s imp l y b r u s he d asi de to acc:ommod at:e a rul.i.nq o f our own Bureau of Int. E~r�-rlal r;:P \'E:' nl.I E! \�\l l d c: h ITIE�n::�1 \' q uo t e d <':IS i::~ ut:.ho r- .it y t i-lE' F.:! >:c:r-! r- pl:. of D Lln.i t �. E!c:l !:3 t:. .:,\te s J n t:. f:? r� n ,3 1 r;: P v ,.,.n u rc.> t�� L1 l :i.n q h u t:. vJ h i. c: h E1 >: c: r.~ r� p t . h,3 S b pe n c:f E C: 1 i::\ n:? d r;lf:1.Sr,:J) f.~ :tf.~ t:Jy t. ht? S<"'HH:? Un.itf:?. d St.,:~L es Int.etr n,:-~ 1 G: Pv E~ nur:> Ser�v.i.c:e .::~s E:' r� e ~:::. u l t. n f 1':.h P L..� D , C <HJ 1t cl r 'c i s:. .i. u n .. (! ~s W t~ V :.i. �~ \'-1 {'_ 1�1i :::; ] f-~ Cf c::l ] j.:�I" C) h l E' !1\ , ~ JP f i.n d f l 0 191

- ' 1' .. . DECISI ON CTA CASE NO . . . . 26�0 c:cJqE? nt. C:l.nd v,:.,}. .i.. d I'"E?i'IS'D n t:. o rn od i"f y ~ mu c h J. pc,;.<::; d e pat �� t �f r��urn f1 c~ co nc: lu !=:.i.o n r�� r=!.::~c: hPd :.ir��~ ~-�� .. p .. {~..i:il.~,.l. l . k ~ ;:~ ~:; E-! >: p r� r~ !'-~' !'''�E� d oi. n t �.I �1E? E:l b o \ 11-: � quote d op inion o�f tiH:?. Lln.it.r-~c:l f3t.E:\1::.r:?.s:. Court�. t. h f:? r�� ~? ~ a nd thE~ r:;,:\ m f:?. ~"; I "I D I .I l d ,... f:' ""'D 1 \If? t ht:' i. den t .:i. c:: a 1 .i ~o;s ~.I P n D~"J b1��� ouq 1�1t br � f 1) t'"P u ' "' .in t .hi ~:; p r�� o c: F:' E' d j n q � r \\If:?. c i:'. n r 1t :� ..i. q n c> r� n t l�'r VJ P 1 1 �-- �:; f�~ �t. t 1 r:.�t I !., 1� i. n c: i r 1 l c� cd r: ' " ' '::; t n 1. c t� i <. �r1 t. h �'�I "1-: !5 :i. 1"1 C:. f '� C.l\ It . .i II r� U irll:c�' �1 : i\ ': J. i':"l 1.�: 1-,1.;�1 <:; pr��,:'l c: Li. c:a l l )/ C:l.)p:i.l?.�~t l "f r�um t. l�1 . ~ 1.. 1:of l:. l�1c l..ln:i.t:E' c! ~3 t�. al".E~ !:; ~ 1:: I 1E~ i n t. F~ ,... p r� <'~ t .1::1Lion �,:; .i. t tv , s lr f:?.C: E~ .i VE�'c:J .in t h E? l...lt I .i t:.r~ d !:; t i":\ t !�?.S h a '/ E:' ,:::~ u t h n t�� .i t "'' l . i v r? E~ f f E�~ c:: t:. .i n 1: h ~'-' p r� o p P r c''' con'"'� t. r� uc t :i. ':-t l "l d E'l p p 1 :i I�: t"l 1: j CI!" I CJ "f C) l I 1� l E~ 1'.1 .. 1'1o i'"F:.' r..:;.o :.in �1..� he::-~ C .;.1 !"' E-~ i.:> I' 1.:>I \ t . t� I j l. h 1�1 U .l. rJ :i. f I C:l t :':1 ;.: ����;,:~ l .--� s:,U I 1r .-: r:! 1�~, � O '��� .i ~�: . �i t )1 "1 !" � q ,f �nc:l i. E' d i 1' ~3E~Cl:..ion ;:_\ ::~:( b) ;-)"[ 1"1\.H J�.J. ,l ..iDI I �:�Ii Jn t E~ I"II i".\J R E~Vf.�~ IH.I P C u d C"! l --' h .i. c: l"i, ,;�, !''i �:::�. i �H:J ~� .In <"' hov r? .. \',' �""'' m F.~ r-e l y .i.mp or�� tE�c:i <~ 1 �1d c:: Dr).i. l'.:�cf C::ll mo .:::.t VE'r- b ,,, tim fr�� nrn f3E~ c:tioli J.4 :3(h ) ;::J �f t:.l l E~ l. l n:it. c~ d Stc-~ tE~~''� T c:l>: Co de cll..1r��.inq th E~ y' l�:�:'i:H- invc~] V'�-�' d :in th e~ L. ~. P...� .. . .. G.s\.t.oi.J.f:.:. c.li�:�?c .i !::; :.i.n r1� f)c c n ,...d .i.�l iJ J v� �1 t: h E' co n clus ion I'"E~ .::c:: h F~c:l .in L. "..P. .� .. L<':I_u.) _l�:, l�.,�h .i.c:: h .:i.!::: �f o 1 l O~<'J F! d b v t h e t..ln .i. t E' c:l ~~; l.:.i':l t.C?'C: l n t. e n I<~ 1 Revenue Ser\ic:e that t h e time n "f pa y ment o �f the ro v<J l.l:..:i. p~; .:i. !E the m.:'l t�.ur��E�Lion po .i.n t". o f the l<'! ithl�l c: llcli.no clut.�l".- !;: h ou ld q ovp t-Tl t h i s-, pr�� oc::E'E~c:!.i n q" N o t mu c:: h n �?E�~c:l b r'? !�; ;:\.i. d 01 1 ,- �::���:, pcm c l ~:::? r1 t". � :::; E:I!;;~~Sf." l"' " tic:;, l�. h a t , bt :":\!:'il':~ci C::1!) t.l�lf::~ I ""P j )CJI'�� t Cl f 1-. 1��1e .i. n v !?:' s; t i. q c�l t :i r 1q e :-: i:":l mi n F.'.' ,,.. , n o t. h .i.. n q i. ~; <::; t a t.e d th a t petition ~ r a t tempted to r~ m it th e r �oy.::l l t i. c�?.!S t. <J H,::I")' E' r�" Fly t��c :::. por ,cl c,r�l t.' !::;. DVJil d r:! c: .i. :,, i u r � ~ .i 1�. .�i. �:,; c :: p ., i c:: i t: l '/ rl ~-, c:: �1:,� t .. ,,,~ cl '1 t I 1;;:, 1:. t:.lif:? t"" D ',' <'I l t .:iE�!:':. .ir 1 t: l�1~:::- ,:��mUU !I I:: o f F' 6 9~ !'::i29.00 ~-,~c:� l'""f? not ,... E�f 'l :i. l t .r-:;' d i.:J / BF' J ( pr;~ t. .i. t..i. o r JF' r�� h c l�� p.in) t o P ,::<V f:?.r� clu E� to Cer1t 1'�a 1 Bank r.. �'.' s t:. r�� i. c: t. ion s . 11 ( E :-: h � II ~~i ~ 11 1::. >: h � II r::: �-� J. 11 , 11 p � 30~ B IR records) Since the roya lt i es cou l d not. I")Q ,... e m:i.L t r:'d t o B;,:1ye 1�� d uE� t o C t:!n t ,,.. "'' 1 B .::1 n 1:: r� c�:?.!s t r.. :i. c: t .io n!::; , i::\ �::; s t .'" t E?d b v res po ndent himsPl f in hi s d ecision i:~ ppE�~cl l E� d f t � nm~ !:~ ur �E~ l y~ n ?s pc:mc:lr.?nt 's c::ou n :', r::� l <:'", h u l .l. l cl n o l C''�>: pr::�c:: t PE~ t �i. l � .i o1 �1 P r � tu ma k E~ e f f o ,... t :!':: , '"' I. b r:� i \: 1. 1. n 1 d \N �f u 1 ~ l:. o 1"� r-;:�m i 1.. 192

- OS DECIS ION NO. ~ 2~%0 CTA CASE thE! s;:;�.me . ArH::I un r� u~:. r.� CH"Hl r:z�n t ' ~: point:. t:. h �3. t ~::; .inc:e the t���cy ;::\J. l::i.c �;:; f�l o?\d h c E:� r t D. C:CI'" UF�ci \. ti [JE~ t i t .i. Clrl er�' S f::lCJDk !::; t. he i l'l C C� fll f.'~ l: h t:! I'" E�O I': b ee i::\ nH:::~ f:::.t.\l:) j r..~c:: t . tcJ v.ti t .J���,hcJ l d .i nq E�\/ (�?l'l .i. f r� f?m.it.tanc E" vJas e f'f E�'ctcd l ;;.l.:.t-:! 1.. , �::; uf �f :i. r: E� i-t:. to ~:;c'\'7' th E� L t.h F�~ C:ICCI'' \ .\ E~l of l:: f�r r-c' r�o y;'!l.l i:".i.F:> :=:. in PE' t.i t.i.UI"tE~ t��' ~;; hu nk <;.. ~ :.'1!"� h e- ] d i I t t:.h<? L.. "U . C,:n.tlk~ d .ic.l ned� i':\mnurti.� Lc " q ,:�., i .� �: p n : d . i t.�:; ,:;,nc:l incom e� '' D ll L llP f.'' E�I'� t. n 'f tl C:� t �l �"� t"E'!:S. icif:~r�,t. Bayrn~ .::~ nd ~ �t�.: f'\ E:>t�.. e�fcH"P ~ no n <'�C:E! !:;:.r,:.;:.i. t y to 1-'J :i. t. hho l d t .a ;.: cl E� V D ]. V F:~ d Uf1 P E' t .it i. r:> n E! l'". \J.Jf:?. , i':\ C:: r::: D l'"d :i. ll f.1) y ~ I'" I..\ J. E-' I� 1..�, ;;:-r t'. <;:. i I ., C E' I':.J. �,c� r.. oy;::, J. t .:i. �?.�::; :i. t �, qu E~~�= t :i. un ,.::n� .I l r:l n ut I"�E! F'"'' :.i. d 6 1�� n., ',/0:' , .. r�r�:-> m:i. t. t:.ec:l i.t ') .l <) ? :.? b v [ )';' 1: :i. ., .i. u n p ,... F' 1�1,3 t"� m,;, c �?U t .i. c ;;,, :. !::=., I r1 c:: .. � �1�. o r��Pr 1.... r �c ::::.:i cl <:." rl t:. for<:? .i gn c n r� p< ) l'. .:~ t .ion IJ;,�,ypJ'.. f)k Li f'?n <_:1 (":'~'''?. 1 J. ..... sc h c':l l f t ~ l... f:?VE' r.. k u o:=.. f:;~n D,:':l )/(-;' 1' - ITIE':~ r� k d u f? t: o Cr-?n t:. t�� c:l l B t:l n k r� f? !c;. t .l"�.i c:: t ..i.on::,-, ~ f::'P t:..i. t:. .i. on P ,... l�'JE�l ~=.; t.tnd r;>r�� n o nh l :.~ q;.:, t: io n t.o VJ .i.th f �,o ld an d p El\' inc c�mF:~ t .c:\ >: - �,:�~ �t:..... ~:; uu t��c: E> c; t�i ~::; :,,, j _d t�.. o y ,':'\ 1 t. .i E'<:; a nd ~ t:hei"� E> �fo lr� < :~ , i t .i.�;c, no+-. l.i. ;:~ l:: � l e �fol'" t.h r0 d eficien cy w.i.thhold i nq t ax - a t -sourc e C:\ SS f?<:;~, ment. n f r- E-:��s pond c~ nt Co mm:i <::;~,; .ior �t E!I'" u'f Int:.E'I'" n <~. l F\ P v r-~ n\JE~ >: >: ::. '' WHEREFORE, We are of the opinir::>n and so hold that petitior Er- is n ot li ab le for the defic iency withholding tux a t source fo r 1965 and 1966 in the amount of P49,995.9 2 and P1 49,557 .44, respectively. Without pronouncement as to costs. SO ORDERED. :::. .1, llu Pzo n C.it v ~ i'k :�t.l"'o t�1 <-:~n.il.:~, J'1 ;:.~ y .~>EJ9. /. _. / / I 193

DECISION CTA CASE NO . . . . ,2..::5750 !.AJE CDI\ICLIF\ : -~ ) ~~ .. _X Z. RI~S A~:;sDc.i,::\t E�~ .Juc:lqE~ H R T F 1 A. J: J ilE�? I' "E? h V t .hi::\ 1::. t l�, j !:: r �e .::\c h r::- d ,:~fte J~ cl t.tE? c:on '"; u l L <':1l.�. ion "'rn o r1q t .hE! rn ~~mhc1 ��� s o f t h e C ourt of T ~x Ap p e ~l s j 11 ,,, ,:�: c: o ,,.. d '''' 11<: F': 1-'J i t h BE~ct.i u n l ~~; . {h - L ic: lr:�' '�/ JJJ o f Lh r: .�� Cc�n ! � l .i. tution. (;kd-;�# I AMf.)I\ITE I LLEH p ,,. 0�: o�; i cl i n (] ,}I. I t1 ( ' c I C out�� t u �f T a >: r:~pp r?.:\ 1~. 194