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Overdraft Agreement. Throughout 1985, 1986, and through November
of 1987, the overdraft amount was reported on Nihon Intergraph’s
financial statements as a debt obligation of Nihon Intergraph,
and Nihon Intergraph reported to Japanese tax and regulatory
authorities that the overdraft amount represented a loan from
Citibank Tokyo to Nihon Intergraph. On attachments to
petitioner's 1985 and 1986 consolidated U.S. Federal income tax
returns and on petitioner's 1985 and 1986 filings with the SEC,
the overdraft amount was reflected as Nihon Intergraph’s debt
obligation that was guaranteed by Intergraph. The overdraft
amount was reflected on Nihon Intergraph’s Japanese tax returns
as a debt obligation of Nihon Intergraph.
Citibank Tokyo looked primarily to Nihon Intergraph for
payment of the overdraft amount.
In 1985, 1986, and through November of 1987, not just the
form but also the substance of the loan reflects a loan to Nihon
Intergraph. For example, if the substance of the loan
constituted a loan made to Intergraph, Intergraph would have had
to reflect and would have so reflected on its financial
statements a foreign currency exposure with regard to the
overdraft amount and, in all likelihood, Intergraph would have
repaid the �823,943,385 directly to the creditor (namely, to
Citibank Tokyo). Intergraph would not have transferred the
�823,943,385 into the checking account of Nihon Intergraph, an
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