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tion of taxes was not a significant purpose for forming the CFC
or effecting the transactions that gave rise to the income. R.E.
Dietz Corp. v. United States, 939 F.2d 1, 5 (2d Cir. 1991). We
do not substitute our judgment for that of respondent; we review
respondent's judgment only to determine whether she abused her
discretion in concluding that tax avoidance was a significant
purpose. The question whether respondent abused her discretion
is a question of fact. Capitol Fed. Sav. & Loan v. Commissioner,
96 T.C. 204, 213 (1991). We will not overturn respondent's
judgment unless it is shown to be arbitrary and capricious. R.E.
Dietz Corp. v. United States, supra at 5; Capitol Fed. Sav. &
Loan v. Commissioner, supra at 213.
For purposes of section 954(b)(4), "to be significant a
purpose must be important, but it is not necessary that it be the
principal purpose or the purpose of first importance." Sec.
1.954-1(b)(3)(iii), Income Tax Regs. To determine if tax reduc-
tion was a significant purpose, we must examine all of the facts
and circumstances. Sec. 1.954-1(b)(3)(iv), Income Tax Regs.
Among the factors to be considered are the following: (1) The
various purposes for the action, (2) the type of business carried
on, (3) the classes of income derived, (4) the frequency with
which the particular item of income is derived, (5) the effective
rate of tax imposed on the income, (6) the place in which the
income-producing transaction occurs or the source of such income,
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