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based is a long-standing, well-known, and firmly established
doctrine of Federal tax law. She also cites Rev. Rul. 76-192,
1976-1 C.B. 205, to illustrate that the Service, years before the
issuance of Rev. Rul. 87-89, supra, treated as a conduit a bank
that was engaged in commercial banking and that was not con-
trolled by the other persons involved in the transaction pre-
sented in that ruling.
While we agree with petitioner that the retroactive applica-
tion of a revenue ruling may constitute an abuse of discretion
where such application changes settled law upon which taxpayers
justifiably relied, Anderson, Clayton & Co. v. United States, 562
F.2d 972, 981 (5th Cir. 1977); Prabel v. Commissioner, 91 T.C.
1101, 1122 (1988), affd. 882 F.2d 820 (3d Cir. 1989), we reject
his contention that Rev. Rul. 87-89, supra, changed settled law
on which taxpayers justifiably relied. Petitioner has not estab-
lished that, prior to Rev. Rul. 87-89, supra, the law was settled
in the manner he contends. Nor has he shown that, prior to the
issuance of that ruling, taxpayers were not on notice that a bank
or another entity involved in a transaction may be treated as a
conduit even though it is otherwise engaged in business and is
not controlled by the other persons involved in that transaction.
In this connection, petitioner does not cite any authority hold-
ing that such a bank or other entity can never be treated as a
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