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Mr. Kent C. Nelson who, during the years in issue, was a
member of petitioner's board of directors and was petitioner's
chief financial officer, testified as follows:
Q. Mr. Nelson, I believe you mentioned earlier
you were familiar with the rate increase in January
1985?
A. Yes.
Q. Was that rate increase higher or lower
because of the spinoff of the [excess value] business?
A. It's hard to tell, because the projection
process projects increased volume, projected labor
costs, and the revenue that we had from growing
businesses that are profitable. And it all comes
together the way it comes together. I don't know if it
would have had any effect on it at the time. It would
be conjecture on my part.
* * * * * * *
Q. Assuming that all other factors were equal,
did the rate increase in 1985 increase or decrease
because of the transfer of the excess value business.
A. I don't think it made any difference.
Like petitioner's other alleged business justifications for
restructuring its EVC activity, there is no contemporaneous
documentation that petitioner investigated or considered the
impact that restructuring its EVC activity would have on its
shipping rates.
Petitioner also argues that by restructuring the EVC
activity, it enhanced protection of the assets of its core
transportation activity from the risks associated with assuming
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