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reason for treating Finance as a conduit.
Revenue rulings represent "merely the opinion of a lawyer in
the agency and must be accepted as such", and are "not binding on
the * * * courts." Stubbs, Overbeck & Associates, Inc. v. United
States, 445 F.2d 1142, 1146-1147 (5th Cir. 1971); see Halliburton
Co. v. Commissioner, 100 T.C. 216, 232 (1993), affd. without
published opinion 25 F.3d 1043 (5th Cir. 1994). Accordingly, "a
ruling or other interpretation by the Commissioner is only as
persuasive as her reasoning and the precedents upon which she
relies." Halliburton Co. v. Commissioner, supra at 232. The
aforementioned revenue rulings contain no legal analysis
supporting their debt-to-equity requirement. At trial, we asked
respondent's counsel to explain the legal foundation and
rationale upon which respondent's debt-to-equity position was
based. Except for referring to the aforementioned revenue
rulings, counsel was unable to provide an explanation at that
time. In respondent's opening brief, respondent cited no legal
authority supporting a debt-to-equity requirement.
Petitioner takes the position that a debt-to-equity ratio is
irrelevant to whether a corporation is acting as a conduit or
agent. In respondent's reply brief, she addresses petitioner's
argument that the debt-to-equity ratio is irrelevant by
attempting to distinguish the cases petitioner cited on the
ground that they did not deal with the type of
conduit/withholding transaction presented in this case.
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