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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 in
which LTD engaged was the sale and purchase of U.S. dollars on
behalf of clients. LTD maintained a bank account at Frost Bank
in San Antonio that LTD used to collect deposits from clients.
LTD called the Frost Bank account the "client clearing account"
or "clearing account". LTD engaged in four types of currency
(U.S. dollar-peso) transactions described as follows:
i. LTD arranged sales of U.S. dollars to a client in
exchange for Mexican pesos. The client contacted a promoter in
Mexico, who quoted an exchange rate for pesos to dollars. Once
the client and the promoter agreed on a rate, the promoter
performed the exchange operation from his office in Mexico. The
client made pesos available in Mexico to be exchanged, and the
promoter documented receipt of the pesos. The promoter then
converted the pesos to dollars at a Government-authorized Mexican
exchange house. Once the exchange was executed, the promoter
directed that the dollars be wired to the clearing account in San
Antonio to be credited to the client's account. The transaction
appeared as a credit on the client's monthly statement. LTD
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Last modified: May 25, 2011