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being deposited with or withdrawn from U.S. institutions,
including Frost Bank in San Antonio, where the clearing account
was maintained. Additionally, INC maintained records of LTD’s
and its clients’ positions with respect to such currency
transactions.
LTD ceased to conduct the currency transactions in its own
name as of its taxable year ended June 30, 1989. LTD's currency
transaction income derived from, inter alia, the fees, which were
reflected in the exchange rates, that LTD charged its clients.
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
1This amount is net of expenses. Neither the revenue
agent's workpapers nor Deloitte's workpapers reveal the gross
receipts.
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.
c. Client Incorporation and Trust Creation Fees
LTD offered its clients the option of establishing offshore
corporations and trusts to hold their investments. Each client
signed a discretionary authorization granting LTD the power to
invest the funds held by the client’s corporation or trust.
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Last modified: May 25, 2011