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section 367(a) upon a transfer of appreciated property is not
greater than the gain that would be recognized on a normal
taxable exchange." Id. 51 Fed. Reg. 17937 (May 16, 1986). We
also note that the legislative history accompanying amendments to
section 367 provides that section 367(a)'s "aim is to prevent the
removal of appreciated assets or inventory from U.S. tax
jurisdiction prior to their sale". H. Rept. 94-658, at 242
(1975), 1976-3 C.B. (Vol. 2) 695, 934; S. Rept. 94-938, at 264
(1976), 1976-3 C.B. (Vol. 3) 49, 302; see also H. Rept. 98-432
(Part 2), at 59 (1984) (referring to section 367 as "rules
governing transfers of appreciated property abroad"); S. Rept.
665, 72d Cong., 1st Sess. 26 (1932), 1939-1 C.B. (Part 2) 496,
515 (stating that the section's purpose was to close the "serious
loophole" available to domestic taxpayers transferring abroad
property with "large unrealized profits").
CMI-Texas did not transfer appreciated property. On the
date of the transfer, the basis of the debt interest was
US$1,125,000 (i.e., the amount CMI-Texas paid to Mellon), and, as
respondent acknowledges, "Had * * * [CMI-Texas] just exchanged
the MPD [debt interest] on the open market, * * * [CMI-Texas] and
thus Industrias would have only received US$1,125,000 worth of
MXP [pesos]." Thus, a taxable sale of the debt interest would
not have resulted in any gain. Accordingly, pursuant to section
367(a) and section 1.367(a)-1T(b)(3)(i), Temporary Income Tax
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