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derive a profit equal to 1 percent of the amount lent to
petitioner; i.e., the difference between 17-1/4 percent and 18-
1/4 percent interest. Obviously, the Euronote purchasers were
willing to buy Finance's notes without requiring that any
additional equity capital be invested in Finance. Therefore,
regardless of how petitioner's assignment of accounts receivable
is characterized, petitioner's equity investment in Finance was
"adequate" to carry out Finance's business purpose.11
Respondent relies almost exclusively on Aiken Indus., Inc.
v. Commissioner, 56 T.C. 925 (1971). In Aiken Indus., a domestic
corporation (U.S. Co.) borrowed $2,250,000 at an interest rate of
4 percent on April 1, 1963, from a Bahamian corporation
(Bahamian). Bahamian owned 99.997 percent of U.S. Co.'s parent,
also a domestic corporation, which in turn wholly owned U.S. Co.
On March 30, 1964, Bahamian's wholly owned Ecuadorian subsidiary
incorporated Industrias Hondurenas S.A. de C.V. (Industrias) in
the Republic of Honduras. On March 31, 1964 (which appears to be
1 day before U.S. Co.'s first interest obligation to Bahamian was
due), Bahamian assigned U.S. Co.'s note to Industrias in exchange
for nine promissory notes ($250,000 each), which totaled
$2,250,000 and bore interest of 4 percent. Because of this
11Cf. Bradshaw v. United States, 231 Ct. Cl. 144, 683 F.2d
365, 374 (1982) (citing Gyro Engg. Corp. v. United States, 417
F.2d 437, 439 (9th Cir. 1969); Piedmont Corp. v. Commissioner,
388 F.2d 886, 890 (4th Cir. 1968), revg. T.C. Memo. 1966-263; Sun
Properties, Inc. v. United States, 220 F.2d 171, 175 (5th Cir.
1955)).
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