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which produced the losses involved here, "ordinarily gives rise"
to a gain from the sale, exchange or disposition of property, for
purposes of section 1.861-8(e)(7), Income Tax Regs., within the
meaning of National-Standard Co. v. Commissioner, supra, and
Black & Decker Corp. v. Commissioner, supra.
We move then to the proper treatment of the items in
question under the general rules for allocation and
apportionment. First, exchange losses attributable to the
accrual of interest payments should be treated in the same
fashion as the underlying interest expense. Interest income
cannot properly be measured without taking into account interest
expense. Interest expense, in turn, cannot properly be measured
without the costs related to measuring it. In this case, the
related accrual of exchange losses was a cost related to
measuring the underlying expense. That item should be
apportioned in accordance with our disposition of interest
expense. See supra pp. 12-18.
For the same reasons, exchange losses attributable to the
accrual of swap payments must be treated in the same fashion as
the underlying swap payments. The gain or loss relating to the
currency swap agreements cannot accurately be measured if one
does not take into account the cost attributable to the payments.
Exchange losses were an intrinsic cost of these transactions, and
must be taken into account. We have already held that the swap
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