Third Circuit upholds Treasury Regulation providing that a foreign corporation, to be eligible to claim tax deductions in connection with real property activities in the United States, must file its tax return within 18 months of the filing deadline set forth in Internal Revenue Code Section 6072

  • In a recent decision, the Third Circuit Court of Appeals held that for a non-US corporation to claim tax deductions in connection with its US real property activities, it must file its tax return within 18 months of the year in which income was earned.
  • In so holding, the Circuit Court upheld the validity of Treasury Regulation 1.882-4(a)(3)(i).
  • Court analyzed the IRS regulation under Chevron, and found that it was within the scope of Congress’s delegation of rulemaking authority to the IRS.
  • Case suggests that Courts will give heightened deference to IRS rulemaking, because tax is “complex and highly technical.”

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