- 45 -
iv. LTD purchased dollars from a client in exchange for
pesos and deposited the dollars into LTD's own account. The
transaction appeared as a credit to LTD's Frost Bank account.
Only transaction (i) involved the performance of personal
services in Mexico by a promoter. Specifically, in transaction
(i), the promoter handled the exchange with the Mexican brokerage
house. In transactions (ii), (iii), and (iv), the currency
transactions were handled in San Antonio with pesos being
deposited with or received from Mexican institutions.
As of its taxable year ended June 30, 1989, LTD ceased to
conduct the currency transactions in its own name. The gross
receipts and direct costs relating to LTD’s income from "Currency
Transactions" for each taxable year are as follows:
TYE June 30 Gross Receipts Direct Costs
1985 1$531,003 - 0 -
1986 745,001 130,485
1987 2434,867 16,125
1988 3232,426 16,863
1The amount of gross receipts actually represents a net
balance amount with expenses already deducted. Neither revenue
agent's workpapers nor Deloitte's workpapers reveal the true
gross amount.
2The amount of gross receipts includes a check of $11,361
from the Guadalajara office representing its contribution to
profits.
3The amount of gross receipts includes a check of $16,426
from the Guadalajara office representing its contribution to
profits.
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