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believe that the fair market value of the Mexican pesos should be
governed by the fair market US$/Mex$ exchange rate that existed
on November 5, 1987.
In order to participate in this transaction and to receive
Mex$1,736,694,000 to invest in Mexico, petitioner incurred not
only a hard currency cost of US$634,000, but petitioner also --
(1) agreed to transfer to the Mexican Government for
cancellation the US$1,200,000-denominated debt that
petitioner purchased from the NMB Nederlandsche
Middenstandsbank N.V. Bank (NMB Bank);
(2) agreed to invest in Mexico all of the Mexican pesos
that were received; and
(3) agreed to provide jobs for Mexican nationals at the
lambskin processing plant to be constructed in Mexico.
Even though these three additional elements did not have an
immediate hard currency cost to petitioner and did not increase
petitioner's tax basis or tax cost in the transaction, such
additional elements provided by petitioner to the Mexican
Government represented valuable and material aspects of the
transaction and should not be ignored if we are to properly value
the currency consideration received by petitioner (namely, the
Mex$1,736,694,000). Petitioner's argument (and that of the amici
curiae) that the Mexican pesos are presumed equal to petitioner's
US$634,000 currency cost of participating in this transaction
ignores the value of these significant additional elements provided
by petitioner.
Petitioner's purchase of the US$1,200,000 Mexican Government
debt and petitioner's transfer of this debt to the Mexican
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