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facilitate the preparation of its tax returns. Terra
also prepared its own accounting records, which were
subsequently reviewed by employees of petitioner.
Terra began to acquire and develop new properties
and sources of crude oil immediately after its formation.
This increased the volume of crude oil available to CRA’s
refineries. The crude oil that was produced by Terra that
was not contractually committed to third parties (its
uncommitted production) was made available to CRA either
for delivery to its refineries or for exchange with other
oil companies in return for crude oil more readily
accessible by a CRA refinery. Terra did not employ any
personnel for marketing its uncommitted production.
Employees of petitioner or CRA arranged on Terra’s behalf
for the purchase and delivery of crude oil to CRA
refineries, for exchange with other oil companies, and
for the sale of uncommitted production not delivered to
or exchanged for the benefit of CRA.
Throughout the 1970's, petitioner consistently
budgeted substantial amounts of money for its petroleum-
related business and crude oil exploration operations.
However, petitioner never reached its goal of producing 50
percent of the crude oil processed in its refineries. In
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