Whirlpool Financial Corporation v. Commissioner
United States Court of Appeals for the Sixth Circuit
19 F.4th 944 (2021)
- Written by David Bloom, JD
Facts
[Editor’s Note: These facts and procedural history are taken from Whirlpool Financial Corporation v. Commissioner, 154 T.C. 142 (2020), as the casebook excerpt included only the dissenting opinion.] Whirlpool Financial Corporation (Whirlpool) (plaintiff) manufactured and distributed household appliances through subsidiaries in the United States and abroad. Whirlpool’s Luxembourg subsidiary, Whirlpool International Holdings (WIH), was a controlled foreign corporation. After Whirlpool restructured its Mexican manufacturing operations, WIH stepped in for Whirlpool’s Mexican manufacturing branch and acted as Whirlpool’s contracted manufacturer in Mexico. WIH sold the Mexican-manufactured appliances to Whirlpool, and Whirlpool resold the appliances to other customers. WIH made representations to Luxembourg tax authorities that WIH had a permanent establishment in Mexico and was able to avoid paying taxes in Luxembourg and Mexico on the sales income. On Whirlpool’s tax returns, Whirlpool did not report the income derived from WIH’s sale of the Mexican-manufactured appliances as taxable foreign-base-company sales income. The Internal Revenue Service (IRS) issued a deficiency notice to Whirlpool, asserting that the income constituted foreign-base-company sales income upon which Whirlpool was required to pay taxes. Whirlpool filed suit, challenging the deficiency notice. Whirlpool and the IRS filed motions for summary judgment. The tax court ruled in favor of the IRS and granted the IRS’s motion. Whirlpool appealed.
Rule of Law
Issue
Holding and Reasoning (Kethledge, J.)
Dissent (Nalbandian, J.)
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