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creating, organizing, or funding MFE N.V. was to avoid the
application of section 956 with respect to MFE.
Petitioner argues that the purpose of organizing MFE N.V.
was to inject an additional corporate layer between MFE and the
deposits to WFNNB “to improve the efficacy of the deposits as
protection against expropriation” by the People’s Republic of
China, which was scheduled to take over Hong Kong in 1997. That
was the testimony of Kenneth B. Gilman, petitioner’s executive
vice president-finance and chief financial officer. When asked,
however, why that was the case, Mr. Gilman replied that he was
not exactly sure. Timothy B. Lyons is and, during the years in
issue, was petitioner’s vice president-tax. His responsibilities
include compliance, tax planning, and administration of the tax
function at petitioner. He is intimately familiar with the
business activity of MFE. Like Mr. Gilman, he also testified
that the purpose of forming MFE N.V. was to protect against
expropriation. Indeed, he testified that it was the “sole”
purpose for organizing MFE N.V. On cross-examination, Mr. Lyon
was asked why no consideration had been given to forming a
domestic (United States) subsidiary of MFE to protect against
expropriation. He responded: “It didn’t really accomplish
anything from the asset protection side * * * but * * * there is
no question it would have been deemed a dividend or something at
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