- 11 -
valuation consistent with the price specified in the stock
purchase agreement. See, e.g., Estate of Gloeckner v.
Commissioner, T.C. Memo. 1996-148; Estate of Lauder v.
Commissioner, T.C. Memo. 1992-736.
In the instant case, in effect, petitioner (taking into
account the so-called "restrictions" and other characteristics of
the Mexican pesos to be received) and the Mexican Government
(taking into account its U.S. dollar-denominated debt to be
canceled and the perceived economic benefit to be received in
Mexico from construction of a new plant) negotiated for and
agreed to the transfer and receipt of a specified amount of
Mexican pesos (i.e., they agreed to a stated price in the form of
a recognized monetary currency). But petitioner and the amici
curiae (contrary to the typical case involving restrictive stock
purchase agreements where the taxpayer is seeking to adhere to
the price specified in the agreement) now seek to disavow the
stated Mexican peso price that was agreed to and that is
specified in the agreement (namely, Mex$1,736,694,000).
With regard to the transaction before us, it is noteworthy
that during the year at issue broad Mexican Government
restrictions applied generally to investments by U.S. companies
in Mexico.2 Properly viewed, the debt-equity-swap transaction
before us, and the so-called "restrictions" placed on the pesos
received, may be regarded as the opening up of a business
See 1973 Law to Promote Mexican Investment and Regulate
Foreign Investment, as explained in Business International Corp.,
Debt-Equity Swaps: How to Tap an Emerging Market, 54-55 (1987),
which foreign law we take notice of under Rule 146.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011