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(c) Foreign Corporations
Pledging Collateral
Petitioner acknowledges on brief that the persons involved
in the Bank transactions structured those transactions as loans
to Radcliffe and to BOT from the U.S. banks in question, rather
than as direct loans from the foreign corporations pledging col-
lateral, in order to avoid tax on the interest that would have
been paid through withholding by Radcliffe and by BOT had those
transactions been structured as direct loans.95 He contends,
however, that the foreign corporations pledging collateral also
94(...continued)
not provide a nontax, business purpose for the form of the
transactions through which that borrowing was accomplished.
Petitioner also suggests on brief that the loans at issue
from the U.S. banks in question were obtained from those banks in
order for petitioner, Radcliffe, and BOT to establish relation-
ships with banks in the United States. He does not cite any
evidence in the record showing that establishing relationships
with banks in the United States was a nontax, business purpose
for the form of any of the Bank transactions. Indeed, the record
shows that petitioner sought to take advantage of his existing
banking relationships, rather than establish new ones, in that he
relied on his relationships with Bangkok Bank Ltd., of which
Bangkok Bank LA branch was a branch, and Standard Chartered Bank
PLC and certain of its affiliates including Standard Chartered
Bank HK, affiliates of Union Bank, in obtaining the loans at
issue from the U.S. banks in question.
95 In fact, petitioner testified that Mme. Koo did not want any
assistance she gave him to cost her anything. We take this to
mean, inter alia, that Mme. Koo did not want to incur any tax
liability with respect to any assistance that she and/or corpora-
tions petitioner alleges she owned provided to petitioner and/or
corporations he controlled. In this regard, we note that peti-
tioner was familiar with the U.S withholding tax requirements
applicable to interest from a U.S. source that was paid to
foreign corporations.
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