Continental Trading, Inc. v. Commissioner of Internal Revenue

Petitioner is a Panamanian corporation. It was organized in May, 1947, and maintained its principal office in Mexico City. For the year 1948 it filed an income tax return in California, and for the years 1949 and 1950 it filed such returns in Nevada.

The Commissioner determined deficiencies in the income tax of petitioner for each of those three years. The returns had been filed upon the assumption and with the claim that petitioner was a resident foreign corporation engaged in trade or business in the United States. The Commissioner determined, however, that it was a foreign corporation not engaged in trade or business within the United States and hence subject to a higher income tax liability.

The taxpayer filed its petition in the Tax Court for redetermination of the deficiencies so asserted by the Commissioner. It presented to that court the sole question as to whether petitioner was a resident foreign corporation engaged in trade or business in the United States during those taxable years.

The controlling statutory provisions are to be found in § 231 of the Internal Revenue Code of 1939, as amended by the Revenue Act of 1942, 56 Stat. 798 .

The facts relating to the…