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considerations. NUF had prepared a binder for the Shippers
Interest contract to become effective as of August 8, 1983. On
the same day the contract was to become effective, Mr. Corde sent
a telex to Mr. Smetana indicating that petitioner postponed the
finalization of the Shippers Interest program to allow for
petitioner's review and evaluation of pending tax legislation.
In April 1984, after restructuring its EVC activities, petitioner
released a report to shareholders in which petitioner indicated
that because OPL was organized as a Bermuda corporation doing no
business in the United States, OPL's earnings were not expected
to be subject to U.S. Federal or State taxes on income.
The contemporaneous documentation prepared by petitioner and
Hall regarding the plan to restructure the excess value activity
emphasized the resulting tax benefits to petitioner. Petitioner
produced no documentation, such as corporate minutes, that was
prepared during the period in which petitioner was considering or
executing its EVC restructuring that indicates that petitioner
had motives other than tax reduction.
Petitioner has failed to prove that the restructuring of its
EVC activity was motivated by nontax business reasons or that the
restructuring had economic substance. Rather, we find that the
restructuring was done for the purpose of avoiding taxes and that
the arrangement between petitioner, NUF, and OPL had no economic
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