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D. Conclusions22
We have substantial doubts as to (1) the reliability of the tax
payment documentation and other evidence presented to substantiate
the Central Bank’s purported payment of withholding tax on
petitioner’s and the other foreign lenders’ behalf in connection
with its restructuring debt interest remittances to them, and (2)
22 In its opening and reply briefs on remand, petitioner
alternatively argues that even if the tax was not, in fact, paid
to the Brazilian National Treasury, in the case of a net loan to
a governmental borrower, like the Central Bank, petitioner
should, for purposes of sec. 901, be deemed to have paid the
foreign tax liability where that liability has been assumed by
the governmental borrower. In arguing that actual payment is
unnecessary and can be dispensed with where the foreign tax
liability has been assumed by a governmental borrower, petitioner
cites and heavily relies upon sec. 1.901-2(f)(2)(ii), Example
(3), Income Tax Regs. In his answering brief on remand,
respondent, among other things, (1) disagrees that actual payment
is unnecessary, and (2) disputes petitioner’s interpretation of
Example (3) of sec. 1.901-2(f)(2)(ii), Income Tax Regs.
Notwithstanding the parties’ foregoing arguments, we do not
consider the deemed payment issue to be properly before us on
remand because it is an issue outside the scope of the Court of
Appeals’ mandate. In remanding Riggs I, the Court of Appeals
directed us solely to determine “in the first instance which of
Riggs’ loans were subject to the Minister’s ruling, whether the
taxes were in fact paid by the Central Bank, and whether Riggs’
credits must be reduced by the amount of any subsidies that the
Central Bank may have received.” Riggs Natl. Corp. & Subs. v.
Commissioner, 163 F.3d at 1369. Indeed, petitioner’s position on
appeal (which the Court of Appeals accepted) was that, pursuant
to his Mar. 14, 1984, decision, the Brazilian Finance Minister
had issued a “compulsory order”, id. at 1368, to the Central Bank
to pay this Brazilian income tax “on or before the last business
day of the month following the month in which the withholding is
made”, Riggs Natl. Corp. & Subs. v. Commissioner, 107 T.C. at
329. It appears difficult to conceive of the Minister’s decision
as being a “compulsory order” if the Central Bank did not
actually have to pay this “tax” (as petitioner now alternatively
argues).
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