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             Moreover, Terra’s operations presented a potential conflict              
             of interest between petitioner and Terra’s other share-                  
             holders.  Petitioner preferred that Terra use all of its                 
             earnings to finance additional crude oil exploration                     
             activities.  However, if the public shareholders were to                 
             receive a return on their investment, some of those                      
             earnings would have to be distributed as dividends.  During              
             the time that Terra had minority shareholders, it did not                
             pay any dividends, and petitioner did not intend that it do              
             so.                                                                      
                  In 1976, petitioner and CRA purchased all of the                    
             publicly held capital stock in Terra for $31 per share.                  
             This price was based on the appraised value of Terra’s                   
             assets, and on a fairness opinion prepared by Smith, Barney              
             & Co.  Petitioner owned all of Terra’s outstanding stock                 
             from the date of the repurchase until July 1983 when it                  
             sold its entire interest in the company.                                 
                  Petitioner maintained control over Terra from the                   
             time of its formation until 1983.  Most of Terra’s                       
             directors were also officers or directors of petitioner.                 
             Terra’s president attended regular staff meetings held                   
             by petitioner’s vice president in charge of petroleum                    
             activities.  Pursuant to resolutions adopted by                          
             petitioner’s board of directors during its March 31-                     
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