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cost to FCI. Respondent contends that the cost was excessive
because exchange rates for French francs to yen published by the
Pacific Exchange Rate Service were less than the rates that FCI
negotiated with unrelated banks. We disagree. FCI bought the
yen after bona fide arm’s-length negotiations with unrelated
banks.27 We conclude that Burndy-US did not transfer excess
value to FCI in 1993 by using exchange rates for the cost of yen
in French francs on July 30 or August 2, 1993, that differed from
rates published by the Pacific Exchange Rate Service.
d. Payment by Burndy-US of the Loss That Resulted From the
Decrease in the Cost of Yen (in French Francs) After
FCI Bought Yen Which FCI Used To Buy 40 Percent of
Burndy-Japan Stock and Before FCI Paid the Yen to
Furukawa and Sumitomo
FCI lost FF22,145,063 (FF300,356,423 less FF278,211,360) or
$3,926,430 resulting from the decrease in the cost of yen
relative to French francs between July 30 or August 2, 1993, when
FCI paid French francs to buy yen with which it bought 40 percent
of Burndy-Japan stock, and September 29, 1993, when FCI paid the
yen to Furukawa and Sumitomo.28 Burndy-US paid the FF22,145,063
27 In light of this conclusion, we need not decide
petitioners’ contention that constructive dividends resulting
from different exchange rates is a new issue.
28 On July 30 and Aug. 2, 1993, FCI paid a total of
FF300,356,423 to buy �5,208,000,000. FCI paid �5,208,000,000 to
Furukawa and Sumitomo on Sept. 29, 1993. The yen to franc
exchange rate decreased between the time that FCI bought the yen
and Sept. 29, 1993. On Sept. 29, 1993, FCI calculated that �100
traded for FF5.342. At that conversion rate, FF278,211,360
(continued...)
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