- 43 -
Pace 831,176
MMA II 2,903,946
Byte 116,313
1The record indicates that, in the direct costs for taxable
year ended June 30, 1985, the interest expenses consisted of IFF
and MMA interest expenses combined without distinction.
3. Currency Exchange Transactions Income
LTD engaged in two types of currency exchange transactions.
a. Currency Swaps
LTD arranged for its clients currency swaps, which were
contracts in dollar futures. In a currency swap, LTD and a
client entered into a contract in which LTD agreed to sell U.S.
dollars to the client for Mexican pesos at some future date. The
sale price for the dollars was determined in accordance with the
interest rate negotiated between LTD and the client. LTD's gross
receipts consisted of commissions that it received from Bank of
America and United States Trust for arranging the currency swaps.
LTD’s direct costs were the commissions it paid out for arranging
the currency swaps. LTD stopped arranging currency swaps on
September 1, 1984.
The gross receipts and direct costs relating to LTD’s
"Commissions on Foreign Exchange" are as follows:
TYE June 30 Gross Receipts Direct Costs
1985 $54,386 $24,750
b. Currency Transactions
The second category of currency exchange transactions that
LTD engaged in was the sale and purchase of dollars on behalf of
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