- 104 -
were located outside Hong Kong.
In sum, the present record does not support a finding that
respondent abused her discretion by failing to determine that the
transactions that gave rise to B&L Hong Kong's income at issue
from the sale of B&L products it did not assemble were not ef-
fected for a significant purpose of reducing taxes. In fact, the
record does not even support a finding that tax reduction was not
a significant purpose for effecting those transactions.
Based on our review of the entire record before us, we find
that petitioners failed to prove that respondent abused her
discretion by failing to conclude that the transactions that gave
rise to B&L Hong Kong's income at issue from the sale of B&L
products it did not assemble and from interest were not effected
for a significant purpose of reducing taxes for their taxable
years ended December 25, 1983, through December 28, 1986.46
Accordingly, we hold that respondent did not abuse her discretion
under section 954(b)(4) by failing to exclude that income from
petitioners' gross income for those years.
To reflect the foregoing and the concessions of the parties,
Decision in docket No.
13983-91 will be entered under
Rule 155.
46 Although we do not address herein every argument advanced by
petitioners under sec. 954(b)(4), we have considered all of their
arguments and find them to be without merit.
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