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B. Central Bank/Liability Issue
In the instant case, petitioner was not required to file a
Brazilian tax return and had no obligation itself to pay Brazilian
tax. See Continental Ill. Corp. v. Commissioner, 998 F.2d at 518-
519. Brazilian withholding tax was purportedly collected from and
paid by the Central Bank on its Brazilian restructuring debt
interest remittances to petitioner during the relending periods of
the DFA's and CGA's, beginning in 1984. For these purported
withholding tax payments to be a potentially creditable tax to
petitioner, the Central Bank must have a legal liability under
Brazilian law to pay this "withholding tax". Petitioner cannot be
considered "legally liable" under Brazilian law for Brazilian tax
if there was no legal liability on its and the Central Bank's part
to pay this "withholding tax". Nissho Iwai Am. Corp. v.
Commissioner, 89 T.C. at 773-774; sec. 4.901-2(g), Temporary Income
Tax Regs., 45 Fed. Reg. 75655 (Nov. 17, 1980); sec. 1.901-2(f),
Income Tax Regs.; see also Amoco Corp. v. Commissioner, T.C. Memo.
1996-159; Continental Ill. Corp. v. Commissioner, T.C. Memo. 1991-
66 (hereinafter sometimes referred to as the PeMex case), affd. in
part and revd. in part 998 F.2d 513 (7th Cir. 1993).
As we have determined in our findings, until 1984, the Central
Bank paid Brazilian withholding tax on its gross loan interest
remittances abroad, but not on its net loan interest remittances.
This treatment was authorized and sanctioned by SRF 368, an
"officio" that the head of the Brazilian IRS issued to the Central
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