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on the loan portfolio’s having a United Kingdom tax basis of
$422,985,520. In examining Standard Chartered-U.K.'s tax returns
for 1984 and certain subsequent years, the United Kingdom Inland
Revenue determined that Standard Chartered-U.K.’s tax basis in
the loan portfolio was overstated and consequently that its
allowable losses therefrom should be reduced for United Kingdom
income tax purposes.
In 1996, petitioner requested competent authority assistance
to resolve the value of the loan portfolio on December 31, 1984,
the amount of the loss realized on that date upon the sale of the
loan portfolio, and the proper treatment of the loss realized.
The United States Competent Authority and the United Kingdom
Competent Authority agreed that the value of the loan portfolio
on December 31, 1984, was $346,630,214 and that petitioner’s loss
on the sale was $87,927,200. The competent authorities were
unable, however, to resolve the tax treatment of this loss. The
United States would not withdraw its adjustment disallowing the
loss to petitioner. In addition, the United Kingdom would not
allow Standard Chartered-U.K. to increase its basis in the loan
portfolio to reflect the loss disallowed petitioner for U.S.
income tax purposes.
Petitioner has not returned to Standard Chartered-U.K. the
excess of the amount received from it for the loan portfolio over
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