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Radcliffe or BOT from one or more of the foreign corporations
pledging collateral so that the interest on each such loan was,
in substance, paid to one or more of those corporations, we would
conclude that the failure of Radcliffe and BOT to withhold tax on
such interest resulted in the avoidance of such withholding,
regardless whether the interest deductions generated by those
transactions reduced the respective Federal income tax of
Radcliffe and BOT.
(2) Horbury Transaction
While respondent does not expressly argue that the deduction
claimed by BOT in its 1984 income tax return for interest paid to
Horbury indicates a tax avoidance purpose with respect to the
form of the Horbury transaction, petitioner includes that deduc-
tion in his argument that BOT received little benefit from the
interest deductions generated by the transactions at issue.
Consequently, we address whether BOT's claim to a deduction for
1984 with respect to the Horbury transaction indicates a tax
avoidance purpose by BOT for the form of that transaction.
For the reasons discussed above with respect to the Bank
transactions, we find that the deduction claimed by BOT in its
1984 income tax return with respect to the interest it paid to
Horbury does not necessarily indicate a tax avoidance purpose for
the form of that transaction.100
100 Moreover, if we were to sustain respondent's theory that the
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