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January 21, 2021

Tax Court holds IRS properly denied deductions/credits to company that failed to file returns until after the IRS prepared substitutes

In a T.C. Opinion (Adams Challenge (UK) Limited v. Commissioner), the Tax Court has held a UK corporation that owned a vessel chartered by a US firm to help decommission offshore oil wells is not entitled, under IRC Section 882(c)(2), to deductions or credits for the tax years at issue because it did not submit tax returns for those years until after the IRS prepared substitute returns. The Court also held IRC Section 882(c)(2) does not violate the business profits or nondiscrimination article of the US-UK income tax treaty.