New York Guangdong Finance, Inc. - Page 18




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          by GITIC.14  The total amount of interest petitioner reported on            
          its 1995 Form 5472 coincides with interest paid to GITIC and GXE            
          as recorded in petitioner’s general ledger and reported in the              
          September 8, 1998, letter.  The evidence supports a finding that            
          petitioner had two outstanding $2 million loans, one from GITIC             
          and one from GXE, and we so find.                                           
                    2.   Whether Any Interest Attributable to the GITIC               
                         Loan Was Included on the Forms 5472 Attached to              
                         Petitioner’s Forms 1120X                                     
               We now address whether any of the interest reported on                 
          petitioner’s Forms 5472 was interest paid on account of the GITIC           
          loan, which respondent concedes is exempt from U.S. taxation.               
          Petitioner has the burden of proving that respondent’s                      
          determinations are incorrect.  See Rule 142(a)(1); Welch v.                 
          Helvering, 290 U.S. at 115.                                                 
                         (a) 1994                                                     
               The record is devoid of any credible evidence establishing             
          that the amount of interest paid with respect to the GXE loan was           
          different from that reported on the amended Form 5472 that                  
          petitioner attached to its Form 1120X.  Consequently, unless we             


               14The details of the GXE loan regarding the date of the loan           
          and the applicable interest rate, as described in the Sept. 8,              
          1998, letter, are not consistent with the facts and documents               
          regarding the 1990 GXE loan that were included in the parties’              
          stipulations of facts.  Nevertheless, Mr. Wong confirmed in his             
          testimony at trial that, during the years in issue, petitioner              
          had an outstanding loan from GXE in the face amount of $2                   
          million.                                                                    






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