- 2 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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