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under section 118, as a nontaxable capital contribution by the
Mexican Government to petitioner or to Procesos.
We have considered the arguments and voluminous material
submitted by petitioner, by the amici curiae, and by respondent.
We, however, remain convinced as to the correctness of our prior
findings and opinion. Accordingly, we decline to alter any of
the findings of fact or conclusions of law set forth in our prior
opinion.
Our prior opinion explained the general nature of the
Mexican debt-equity-swap transaction that is at issue in this
case, and we will not repeat that explanation. We, however, do
make herein a number of supplemental findings of fact and
conclusions of law, and we provide additional explanation for our
opinion, as set forth below.
For convenience, we combine our supplemental findings of
fact and conclusions of law.
All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Value of Mexican Pesos
It is argued by petitioner and by the amici curiae that the
fair market value of the Mexican pesos that petitioner or
Procesos, as petitioner's designee, received to construct and to
operate a lambskin processing plant in Mexico should be presumed
to be equal to or measured by petitioner's US$634,000 cost of
participating in the transaction. We disagree. We continue to
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