- 177 -
because the express provisions of that article have been satis-
fied.
We now turn to petitioner's contention that the interest at
issue in the Horbury transaction is exempt from U.S. taxation un-
der article VIII(1) because it qualifies for the grandfathering
provided by Rev. Rul. 85-163, supra, with respect to interest
payments on, inter alia, debt obligations issued prior to October
15, 1984. To support that suggestion, petitioner relies on his
testimony that the Horbury loan was made prior to S.C. Gaw's
death in October 1983. For the reasons previously stated herein,
we do not find that testimony to be credible. We therefore are
unwilling to accept it. Accordingly, petitioner has not estab-
lished that the Horbury loan was made prior to October 15,
1984.132 Consequently, he has failed to satisfy his burden of
showing that the interest at issue that was paid with respect to
that loan is exempt from U.S. taxation under article VIII(1)
because it qualifies for the grandfathering provided by Rev. Rul.
132 The only reliable evidence in the record relevant to deter-
mining when the Horbury loan was made is inconclusive. The
parties stipulated that BOT claimed a deduction of $151,722 in
its 1984 income tax return for interest it paid to Horbury. The
record does not contain reliable evidence showing whether or not
any of that interest was paid prior to Oct. 15, 1984, and there-
fore the payment of that interest does not indicate whether or
not the Horbury loan was made prior to that date. It would be
unfortunate if, in fact, the Horbury loan had been made prior to
Oct. 15, 1984, and thus would have qualified for the grandfather-
ing provided by the Commissioner in Rev. Rul. 85-163, 1985-2 C.B.
349. However, the instant cases are no different from any other
case in which a taxpayer fails to satisfy his or her burden of
proof through credible evidence.
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