Intel Corp. & Consolidated Subsidiaries v. Commissioner

The Commissioner of Internal Revenue sought recovery of taxes from Intel Corporation and Consolidated Subsidiaries (“Intel”) for the years 1978 through 1980 in the respective amounts of $4,660,900, $6,539,152, *977 and $24,676,625. Intel timely filed its petition in the Tax Court on September 19, 1989.

Settlement negotiations disposed of some issues, but others were unresolved. After a recomputation of the deficiencies, the Tax Court on December 9, 1993, determined that Intel overpaid taxes in the amount of $87,476, $10,294,785, and $2,524,388 for the years 1978, 1979 and 1980 respectively. The Commissioner appeals from the decision of the Tax Court, under its heading “Export Source Issue,” while Intel appeals from the decision ordered under the heading “R & E Allocation Moratorium Issue.”

We affirm each of the Tax Court’s decisions.

I.

AN OVERVIEW

Few areas of federal income tax law rival in complexity the taxation of foreign source income. Not only must the indices of domestic and foreign source income be established, but its treatment by both the United States and the source nation must be determined.

The United States does not cede to the source nation the exclusive…