August 3, 1981

********** ("Parent Corporation") is a Delaware corporation with its principal office in Massachusetts. It has five wholly-owned subsidiaries, all of which were organized outside Massachusetts. Four of these are operating subsidiaries: ********** ("Sub A"), ********** Inc. ("Sub B"), ********** ("Sub C") ********** ("Sub D"). The fifth, ********** ("DISC"), is a domestic international sales corporation meeting the requirements of Internal Revenue Code Section 992(a)(1).

Subs A and B are manufacturing concerns. Sub A is an Iowa corporation that has never conducted business in Massachusetts. Sub B maintains a stock of goods in Massachusetts from which it fills orders for Massachusetts customers; it has no other contact with Massachusetts. Subs C and D were organized by the Parent Corporation to perform services in foreign countries so that the Parent Corporation's income would not be exposed to taxation in those countries.

The DISC's income, assets and liabilities are attributable to export sales upon which it receives commissions from the Parent Corporation and from Subs A, B, C and D.

You inquire whether the Parent Corporation is required to include all the income, assets and liabilities of the DISC in its income, assets and liabilities for purposes of determining its Massachusetts corporate excise.

Massachusetts General Laws Chapter 63, Section 38G provides that:

"[a] domestic or foreign corporation subject to tax under this chapter shall for the purposes of determining its excise under the provisions of this chapter include in the report of its income all the income of any wholly-owned DISC, whether such DISC is organized under the laws of the commonwealth or the laws of any other state, for the taxable year of such wholly-owned DISC which ends immediately after the taxable year of such corporation and shall include in its assets and liabilities all of the assets and liabilities of any such wholly-owned DISC as of the end of the taxable year of such wholly-owned DISC which ends immediately after the taxable year of such corporation."

Based on the foregoing, it is ruled that the Parent Corporation must include all of the income, assets and liabilities of the DISC in its income, assets and liabilities for purposes of determining its Massachusetts corporate excise.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 81-72