§882 — Tax on income of foreign corporations connected with United States business

Respondent requests that “the Court overrule its prior opinion in Swallows Holding I because the Chevron analysis materially differs from the Court’s National Muffler analysis.” We decline both parties’ invitations.

If the majority’s hesitance to explicitly overrule Taylor Securities is an endorsement of what was, over 60 years ago, “the generally accepted rule concerning the number of returns which may be filed,” majority op.

Section 882 provides for direct U.S.

Overview A foreign corporation engaged in a trade or business within the United States is taxable under section 11, 55, 59A, or 1201(a) on its taxable income that is effectively connected income, see sec. 882(a)(1); such taxation is consistent with that of a domestic corporation. A foreign corporation not engaged in a trade or busine

d to the amount of income tax properly due from YA Offshore. The tax for which respondent seeks to hold YA Global liable, however, is the partnership’s own withholding tax liability under section 1461—not YA Offshore’s liability for income tax under section 882. A partnership’s withholding tax liability under section 1446 in regard to a foreign partner will often exceed the foreign partner’s tax liability: The partnership’s withholding tax liability is computed at the highest marginal rate, rega

881(a)(1) or (2) under section 882 the income ofa "foreign corporation engaged in trade or business within the United States during the 8Section 7701(a)(5) defines a foreign corporation as one that is "not domestic." Section 7701(a)(4) explains that "'domestic' when applied to a corporation or partnership means created or organized in the United States or under the law o

amounts of$1,090,000 and $1,170,000 for taxable years 2009 and 2010, respectively, are not U.S. source fixed or determinable, annual or periodical income under section 881, or income that is effectively connected with a U.S. trade or business under section 882." 2. The Avrahamis' Returns The Avrahamis likewise filed 2009 and 2010 tax returns. Incorporated in their returns was the income or loss--reflecting any insurance-expense deduction-- passed through to them from numerous partnerships and S

amounts of$1,090,000 and $1,170,000 for taxable years 2009 and 2010, respectively, are not U.S. source fixed or determinable, annual or periodical income under section 881, or income that is effectively connected with a U.S. trade or business under section 882." 2. The Avrahamis' Returns The Avrahamis likewise filed 2009 and 2010 tax returns. Incorporated in their returns was the income or loss--reflecting any insurance-expense deduction-- passed through to them from numerous partnerships and S

We apply different rules depending on whether the income is U.S.-source income or not U.S.-source income. In the case of U.S.-source income that is effectively connected with a U.S. trade or business, a nonresident alien will be subject to the graduated tax rates applicable to U.S. residents. In the case of U.S.- source income tha

882 allows certain deductions and credits for ECI, and the net income is subject to tax. Conversely, income that is not effectively connected with the conduct of a trade or business in the United States is subject to U.S. taxation at a flat rate of 30 percent unless a different amount is provided for in an income tax treaty. Sec. 881. - 15 -

Petitioner argues that section 884(f)(1)(B) does not authorize the deduction of interest; it merely provides the extent to which interest is allowable as a deduction in the section 882 computation of ECI.

es that there were “adjustments to income” in the form of “gross receipts” for the years 1984, 1985, and 1986 in the amounts of $163,482,065, $205,277,709, and $399,260,666, respectively. After applying the section 11 corporate income tax rates (see sec. 882 — Tax on Income of Foreign Corporations Connected with United States Business), the Form 5278 states that the “total corrected income tax liability” for 1984, 1985, and 1986 equals $75,201,750, $94,427,746, and $183,659,906, respectively. Th