Rev. Rul. 73-199

The taxpayer, a domestic corporation, paid a dividend to its shareholders out of its current earnings and profits, part of which were attributable to the current profits of its foreign branch. The foreign branch did not remit any part of its current profits, retaining them for use in the foreign country. The foreign branch office is a commercial financing branch described in section 4920(a)(5A) of the Internal Revenue Code of 1954 with respect to which there was an election in effect under section 4920(a)(5A) of the Code to treat such branch as a foreign corporation. If a domestic corporation applied money or property for the benefit of such a foreign branch, the domestic corporation would be deemed to have acquired stock of a foreign corporation in an amount equal to the actual value of the money or property so applied under section 4912(b)(2)(B) of the Code, and such acquisition would be subject to the interest equalization tax imposed by section 4911 of the Code.

Held, the taxpayer is not deemed to have acquired stock of a foreign corporation and is not subject to the interest equalization tax imposed by section 4911 of the Code since the taxpayer has applied no money or property for the benefit of its foreign branch for purposes of section 4912(b)(2)(B) of the Code.