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virtually simultaneously on June 30, 1993, and the last two steps
(i.e., petitioner’s relending $20 million to ITC and ITC’s using
that $20 million to repay the $20 million that it borrowed from
Royal Bank on June 30, 1993) occurred virtually simultaneously on
July 2, 1993, the next Canadian bank business day.
If, as petitioner claims, it relied on Price Waterhouse’s
advice set forth in the June 15, 1993 memorandum and in Mr.
Bond’s draft June 1993 file memorandum, it seems to us that
petitioner would have followed such advice or would have been
able to explain why it ignored such advice, which it has not.
The June 28, 1993 file memorandum from Mr. Bond is the only
written memorandum from Price Waterhouse personnel that sets
forth the steps of the disputed transaction as they occurred.
However, that memorandum did not provide any advice by Price
Waterhouse about the tax consequences of those steps. Instead,
the June 28, 1993 file memorandum merely set forth what peti-
tioner intended to do, as follows:
In order to avoid the Canadian withholding tax, the
Company plans to structure the transaction as a return
of capital for Canadian tax purposes while still being
considered a dividend for U.S. tax purposes. The
Company plans to take the following action:
1. Canada will borrow $20 million (U.S.)
from the bank and repay a portion of its
debt owed to ITI.
2. ITI will use the $20 million to purchase
a new class of preferred stock issued by
Canada.
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