Central de Gas de Chihuahua, S.A. v. Commissioner

102 T.C. 515 (1994)

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Central de Gas de Chihuahua, S.A. v. Commissioner

United States Tax Court
102 T.C. 515 (1994)

Facts

Central de Gas de Chihuahua, S.A. (Central) (plaintiff), a Mexican corporation, rented trucking equipment to another Mexican company, Hidro Gas de Juares, S.A. (Hidro). Central and Hidro were commonly controlled companies, meaning that Central and Hidro were related to the same parent company. Hidro used Central’s trucks to transport gas from the United States to Mexico, but Central did not receive any actual rent payments from Hidro. Central did not file a tax return. The Internal Revenue Service (IRS) (defendant) allocated income to Central equal to the fair value of the rented trucking equipment and issued a deficiency notice to Central, asserting that Central owed a 30 percent withholding tax on the allocated income. Central filed suit, seeking judicial review of the deficiency notice. Central and the IRS filed motions for summary judgment.

Rule of Law

Issue

Holding and Reasoning (Tannenwald, J.)

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