A.P. Green Export Co. v. United States

A.P. Green Export Company (Green) (plaintiff), headquartered in Missouri, exported brick to Latin America and Canada. The sales contracts between Green and its customers stipulated that title to the goods and responsibility for their shipment belonged to Green until delivery of the goods to the customer. The retention of title until delivery served a legitimate business purpose because an exporter’s retention of title until delivery permitted an exporter greater control over its shipments while en route to their destination and allowed the shipper to make insurance claims regarding the goods in the United States if a loss occurred abroad. Green’s goods were generally priced CIF, which meant that Green, as the seller, was responsible for the cost of freight, or shipment, and insurance. The insurance policies purchased by Green covered the goods that it shipped abroad for several days after arrival. The documents indicating ownership of the goods were transferred to the buyer upon acceptance of the delivery. Green claimed that the income from sale of its goods was a foreign source and, accordingly, Green was entitled to favorable tax treatment of its income derived from such goods. The United States government took the position that title of the goods passed in the United States, so Green’s income was subject to treatment as domestic income with respect to income taxes. Green sued the United States for a tax refund.