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held that a foreign exchange transaction does not involve an
exchange of property. National-Standard Co. v. Commissioner,
supra. Furthermore, the many cases interpreting foreign currency
as property have, for the most part, involved the issue
characterization of gain as ordinary or capital, and consequently
are of little help in the present case.
Respondent relies heavily on Black & Decker Corp. v.
Commissioner, 986 F.2d 60 (4th Cir. 1993), affg. T.C. Memo. 1991-
557, which we find distinguishable on its facts. In Black &
Decker Corp., the taxpayer liquidated the stock of a Japanese
subsidiary at a loss, and argued that the loss should be
apportioned under section 1.861-8(e)(7), Income Tax Regs., to its
worldwide income, because the taxpayer's purpose in setting up
the subsidiary was to augment its worldwide economic position.
The Tax Court and the Court of Appeals for the Fourth Circuit
both rejected the taxpayer's argument, and held that the loss had
to be apportioned to foreign source income, because the stock of
a wholly owned subsidiary, viewed objectively, "ordinarily gives
rise" to dividend income, which in that case would have been
foreign source.
In the instant case, the foreign currency, while qualifying
as property, would not ordinarily produce a type of income
itself, independent of the assets that were denominated in that
currency. We are not prepared to say that foreign currency,
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