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withholding taxes paid by the Central Bank should not be reduced
by the pecuniary benefit received by the Central Bank.
Respondent on the other hand contends that Amoco was wrongly
decided and should not be followed in this case. Specifically,
respondent argues that in Amoco this Court and the U.S. Court of
Appeals for the Seventh Circuit misapplied section 1.901-
2(f)(2)(ii), Example (3), Income Tax Regs., to exempt the
transaction involving a corporation owned by the Egyptian
Government and the U.S. taxpayer from the subsidy rules of
section 1.901-2(e)(3), Income Tax Regs.
Alternatively, respondent argues that this case is
distinguishable from Amoco. Respondent suggests that, consistent
with the borrowers-to-be theory used in the Brazilian Finance
Minister’s March 1984 ruling, the borrowers-to-be (on whose
behalf the ruling concluded the Central Bank must act in paying
the withholding tax), and not the Central Bank, were the
recipients of the pecuniary benefit the Central Bank received.
And respondent concludes such borrowers-to-be are private parties
who cannot be considered part of the Brazilian Government.
Because we agree that the facts in this case are
distinguishable from those in Amoco, it is not necessary for us
to reconsider the holding in that case.
Petitioner argues that the pecuniary benefit at issue here
was provided by the Brazilian Government to its own
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