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not entitled to the sec. 165, I.R.C., loss deductions,
interest expense deduction, or deferral of foreign
exchange gain.
1. Held: P did not establish that it had a tax basis
in each of the three terminated relationships and,
thus, is not entitled to deduct losses related to these
relationships.
2. Held, further, R’s section 482, I.R.C.,
adjustments, relating to the intercompany transaction,
are arbitrary and capricious.
3. Held, further, the economic substance doctrine is
inapplicable.
4. Held, further, pursuant to sec. 1.1502-13, Income
Tax Regs., P is entitled to defer foreign exchange gain
relating to the intercompany transaction between S2 and
S3.
William E. Bonano, Richard E. Nielsen, and Annie Huang
(specially recognized), for petitioners.
James P. Thurston, Kevin G. Croke, and Usha Ravi, for
respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, Judge: The issues for decision are whether:
(1) Petitioners’1 claimed losses relating to customer
1 All references to petitioners are to Claymont
Investments, Inc., and its consolidated subsidiaries. All
references to petitioner are to Claymont Investments, Inc.
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Last modified: May 25, 2011