CTA Case No. 1699 (Decision)

. : 1' �.1 . ol"' 'HiE PHTLIPPINFJI, r� � ..,v\.-..Lu.. 't' Ql._~ 1'AX APPEAI.I QUEZON Cl'ri ~. . ...... ... _ . . ... ... .......'X .: ~- s, .u . t... :r . . c. ~:. 16"' 9 - v r us ... L' IJ~1 i. l f 1 .I N l �.Jtit o.::.. !' .;;.) b.t l' .vievJ c !' t e eci nio.r or' re- ... 01 t Co ...i r, t J. 11~. r t �~ VUw s J . ... ta 0 j ~~ -� f t d. 7�' ' 4< 0 I L, J,' '3 p e .,n .i1.g uP-ficl.ar;C � e n.:>.es , s .trcr..vr ,e n i nterests , I or .L ') ~I, 1/ ~ '. J. '-U...l ::;t , \.tv � ' ..L I. - a ... u Cll' .e tr ' �r v' � I � ct~ . l'J'iCU l.UI ... l c.r u <Il the l.LJ..J.,.. -~~ c h ' . \... .I ' . ror tne 0 u cor per i...1.v1 ~L.a. ... u,. ~. ! c.. er. tr,A ;;> ' r r . ' 377

0t.. 1 lv C'l � C. t. ~ ~� v. . 0 9 a re r .iJOrtt~C1 in .� s i nco1 e ta:x rc �urrls he "ca�u re- l y t bo J ., , a... � t t1c i .t c mo fr '.l far:. in on the ' ac - es r revie ure .. ~e h s lr1co .�e t x returns , c.eclar iLl.'"' th rein i 1cu rc � s .ri�3 ... , b r.u .. es .lJ u.5.v1 et.t<i but mitte there l'vL� nc.. tn~ 1L � el'l. eL r'ro , t ..e o.� . e vr er .4.' the o s e l v lu.nta i ' 1 o ort t:.r t1 & uve r uel' .) , SJ tt1el r i e r.ue � fl c tl h 1. 01' ' ' l ..n � ) . o;, eidJ ',; , 7'- " . c);- , r .s p ~ tJ'<~ly; ai1U t~ e ca J.tal ~u .. of 34 , 22 � � ::l'~" frv1 the :;al of ~ c ~ e~ a a t10lti f� c o tot o..t. vl t o t~ �� i_ J t..Le � n a.ed i1co et11.1orors pal h uw i 1,.iJ. n � 1 37 8

- - i.IL. ol f t;'? l.)E l o . 1699 3 tux.a for 19 v _n� 19 w re not p� 1<1 y pet tioners c u �e o t 1 V .P � u.e t or.. eir ori n 1 Cu eou~l.lt' th rei a t ' e vi er~a p rtair it to � 0 Tal Cc.: . 1<' brua 21, l S J , Jetit uu e.r"' r t-. cc v , r o re(p n tH.t 1� �e ~mcrt t e o� , .:: 5, 1 ~ . j2 ci c t.Cv.l.l. ' sr h 0 i.t:. t~r st.., r p J a � ~ u c i-irot .� t' the saiJ. '';; essr~ ent ~ re - . ' CiUC t ;:.{ te ze s fol 0 1/$: t 96 , 0 . 84 I U, 5,3 , 29~ . 5 I .1. U4 ue ! hC t "tu.; u e ~ncv e ==~5. 140 ,~ ~� r --- - - -s -s e-- -~ - a- --- -- -- -- -~uut a dJ ~. :.. ~~l... { ~e -------------- - - �--------- ......... r ' ~ lLO ---- -- --- - -~--- ( urCI T-1 ... t..... t~"l:t ...r "Lerc t fro.t. - �~ - 59 t b- ~o- 62 ------~ - .G .....~.~. v .1. "" \... I.,.LJ.,.... ~ :::l:::::::=::=::::::=: 1e 12u , 2 . 4 a; 2 ' 93 . 9 J. � � 37 9

- ln tercs i r..c C..ln~'-.l - Fi - -�-C-�---V-� o.f. t he az:.ci hi � r e �p rt ..- - ur..I 3,G �u cla 8 , 130. 8) n e e t . s le t a payuble ----- 9,1/ � 4 iro uct1' n xpenues .fter sal~ of ba ~ 4, 312 . 53 .t 1 Cv . - -- ,2 ,9S'3 � 7 !.m:. '!'- !:)1.; i. HA...13 'r�O;i. 1!'irar c.:..n (..orp .. of 1 ' \'..)l {.... . f_.)...."L . ___ .,.__ fror . A. A. -r - - - - - - - - - u6 , o~ . ~ h i . � ~ � c ,, !J ... ir. a; r;, /?v . 1 of . 22 - - - - - - -~ --- -~ -- o �� : y a .. �� e:; ...o u ~ al ce ~ ~~~ -~~ ----- ~ - -- ~-~~----- :� 3 8 0

\ r r~.' eM -l L � 99 5 J : 1 i.J;9 ,;) ur�c h :r e - ----� ... -------- t T rAL �~ t urn -------~---~ � u , 994. 7 tr c m .Lcs~ . r.c 1 �e of :J - - - - - - - ...... --~- -- - ... - s ) ~ j .:1 ' & J � .� \.1. - - - - _________________ ._._ .... for ~i: !!S _____ _..,..., ___ .,.,.._ ......... ~--.., . t iHI..!Owe per �a tur n ------- -- - . 73 ,~ �3 ... 'r ro Ls � ,. 3 81

l,ECIS 1 �' - t.; \..- I < !_, UU � ';/ ; '.!'ax . .., ------------- ~ e~ d e s~ : ( Lal<::.J.~ <J - - - - - - - - - - - - - - - - - - - - - - - - 5vp 1 'd : ' U L'C .0 - ------------- 1 t [;...1' .L �~ I � "' 'Ia:.. r&;..,-�.-.,- ---------------- ... 1 :;~...; ), 11 n ter es ...... GJ,.., ,, 1. l !- ) , ; � . �4 a.u. .. ) ,/11.; -. 1, res ct;. vely . .rr .. l . l. l\-8.1' co~ t J..... Cv.-C.: (..;l.~ ii:.~.:.,':.: . . .,.,~ ~ l �J . A acto '.raJ .Gt Go . ( ~51 to l~ol); 2. 3 ' . l' 1 00 o ' I ' !,.. j� .J. ..C t.JJ tJ 0 .1. .i:�l:: J , 0 j � t: v J. .i~ � J � :1.n (. c Lranbt- ~G- . f0r 19}~; . I c t- .10 of ~9 , l 'i' e �ro �e s ..;.l.J.lQ IV e ~Jl e rcu �.r�-�'lt of - 3 01 u~!ea~a ~~i u . !�-�d"'c-...i.m. e... ,.:t:H.Lse:; of itt-t312 . :,] i l'- c '-' r -:? � .i' _. "Ll e .:H:t 1 ~ " G � Gr.- a lJ n J.- f\LlD f_r 2..'.,-~ ; und ./e h 1 u � c s s he cu:nt stea i te.. � 1I t he rder of th lr p rese~ta tion . .. 38 2

- t:.CJ.~.. lllll - C: Ti' Clt. ' ~ o~ ' -�'1 .!lor each f u , . wb 0 ��r � 1 u .t-~r8� � .l.u t .. (, <:...I.~\.' (....,L,tl'o..l d stoc, ! � l~... of w� �.e Co . � 1:� u& ~I�au.i. t<=J~ l�� t ~ 1..:; () ~�ra n ('.f. I . t� f ~-'" ;:} n co ....p Jli 'tn ..JU.t .L '~ L., j ")j . f..; s ._. r� j J,.> .1.. . t ~.::res "',o 0 r , l 1 th.e a �OUJt v l i: " ~';,o/.; . ...) "" ,.. l.tCCQ ly li.~d. to �' f the tte J.. ... uuc t. tL J.J � .' p iu n J.V � 0v ..� Uv (3) ar ~ ~e s .l lie (:C'USe ~ ~ u. u;. e \1&. ~; iL ebtea t1e c ;a.u.Y 1. a~� w.t.s ceeair� . 7'-J ) !.~.I }/ ' '-' j ai � "' ... t � .) . . . i � � ine ....at. .1al ..t.:io 383

- CT. 1(�')~ 8 0.1' etur ...-.ln~ t he axttb.te in- Z'J.D t-lJ: (1) C�4 S,l .:�ecei 41ts ar.tu is- b rse ents ou~ s; o (_ ) tte c u~l sis . 'rho aoc - ll.>ti � t~pv u I':J �11on ent ... a �r.nx pa or 7� ) 0... J 1 S 11 8)\ S ' \ D l . . ' l~jlt()- 4/ ' J:) � 1 til c.t� l t e ,he buv ' of' t.n PO..>- r; � ilis our I. '.1. A ,~.\l; C � . _pru. u.l .... ate p.lr~�ant t v c- d cor- ...::...., . '-'-: � 384

- C'J' � �.u.:. � 99 9 .1 lLe . is cor.4t �u t ve recei t 0 "rl 1ncoa i a t pa ' er r ( tne 1 c lt:: i;,l a.i.J.ab e t hb ; ( 2 ) tte ebtor i aL e ld rea t ' a� i 1 � ( 3) I ;;;! ht to r ceiv J.s .not r s I'it: , & td ( ) hi to ~..L, receiv e ~ tnc re 'U t. 1.: t.he ~xe \.. � ~e of h � own c h ice . C. � ul at , 3l �'1 � ~ . 06 7; 'i l �" ar - r ' s , lL ~� ~ � � 20 . ) n th tJO~ .:... t\ra- r. � t .1: st 1 o, i xE!C' .ru. t... o . ; 1..; !inane ad t pa 1i ; his ri ht to recei a re~t ln~..:o i~ w .t tu u re~trict ~ s to tho 1 c n p u.ent; ll . '�llu e o c" a wa f t vw11 cu ico . rt, to r co' v .u-. i.t!LGT 1 ov- ~ 0} " "" . od. � J� /- ,n r ' e c.L r c 1t re oric I'ie .a, 1 '0 Cv.L ~4 ~ e tl ~ b rec rue � at t - c~ua~ i�t rus ret 1 r-'ot o :r til- a.. be r.o:;; J.,..a but .e n s ;� 38..5 \

... CTA ~ � 1699 1. 0\�; n cu tr ~e 1rte est t er of . Tho a ts f tl i t �ta ..a er .i..r.~.voJ.v n- ttw ubs t ant1al in erest re we t tle X:.n m ~ . Ar ne �a because the s t...e a r c rJed t tr! a y ' c; b oli eri e deduc ion t le salu b t� nt � � c e � ss nco,...e -:lf th3 c mpar y for 1957 l:o 1.,. 1 , incJ.usiv , ca no be sa.iu. to flo e bceu 1:aade w t u t the 1 ~o of r . ranc t!A .. s pros ue t ana o.~.tr 1 t tuc hol er of th c pan� � Fetlt!oner i.t..si ted anu cl 1n1 th� t , s uc Ara �o Jrar.et w ludebted t-o J . ra.u to. t Cu . fro 19~7 to l9bl in a ou ts e coe it459,879. 3 wl c was a vaueeJ at.a .P ' 1 � by . 1... t 1 llpplne 1 a i nal , no iL e �est ~ ac r � ~r� ;:4-e a b c u e. ....et- ff ta e~ ~l.'fec b.t per a iion f - .l w. Co~.~ ensat � on is a moue oi' e:x t.i ..t,.ui.snlng to tne c �..c rrEu..t � ct t the ot., � .~ 1:.1 r~ 1 the ers ns wh 11 elr ~:mn r-' a dt .;J r rGCv . ll ae t rs ar c..r <l () 0 _:)!'OC 0 each utt1 r. hil upensat.iv ro .:JOtu.l..IJ.e s � n 1 any 1' spacts tie c � ll 8.\V oehf! ur vunte� I.! J.. n provtaea .lr. ce taiL J:.)ruvi �.ms U .J.~. the llu1 w 0 (..Qurt, i t olfi'e r~ r ou the tter iu that a set- off or co nte lai::n. nust be Aleauo t be 'f-ct l; ~~ ore � ~ co ~ Iwa~i~ t K s i"' 386

- - Cl'A tJ ~ 1 pl ce b.i� operDtJ. r.:. ol.' l , an o.xt r.tgu h s �ciprooal- l�Ul ly , ., u� � r..�co , 1 f c' re ~ rese1t ( t . 1)~ � , 1 1 c ao ri .e t�h. .:Lp- m � t ~ � '1bts cvz.sist .~. a ~u 'I he two e; ~!l e- � re itut .'(-' 1ne ou co - . :nt l l "' .t�o CL tt.l~.<. the .tx� 1 .ii..~ . tl l a er .::. w! v .1. t,U ;t ue rrc.. e t ,.!.' � ,.~ro .t of t L e""r�s 1<;.'I t c l .... . 1'70 .... h e .1.~-~l. th n ~urc l' t h~;;; t Dl.;,:.H:IC ,iQ. p tw tda ' l �.id �1 .r:: u .a e �.�U'L s �-.b..i t~; tr e t,1UI' "o e L1..... y e n J.' ' e.,et. !J a ' 0 l y bc...Lanl.!e � � ... ta .. ~,;~,! ~1 ... u � CCvt..a:.t If t ol t.1 co l&!j. a 'il i .1-.:> lO i d 1.' V 'O.Hh1t e 1 ti.. t n ebt.e nebo of 387

- .... - CT 1 ."J9 .t.' e not r en t be a b e . .~ 1 tl! ~ d t u n t.'1 b te c p <1 , t. e llow ..... M .. com ny to o uct ~ � e ,, t ~ t..r "� ncv e ..~.ro a at e :rune 'Li e ranteu }{l' . .H.I'~;; 11et� ~..be i�-tr cted opt ,.. .( not c ' iu{.:r his i tera lC litO .i. �- v r- te ~ r b c .... a.l i l 1a t . e .~..co 0 po te .:> .. b.e cash l);.ts hil-.1. is u�� se Hts eth of �cou.nt 1 �� 1J u r t.!P � . c t>;J <...� circurns tollC 't 0 c u e , \'1 e � c c s s tr a 11.~ to t1 d t.t a he 1 t ;)s t ir- vLSt r c lv~ �. by hi. ~ fr .e 1 i.ti~ i.nu l iu al 2. cr �ui r� r.etr.. was a1 ~l , Ul7 . 3l u � c rue ~ te os re~ e~t e ) � he~ n c � .s io. r he at r cla ' e th~t he as no t 11 b tt1er �or be- c e hi l .nco e ere declare r_. Ute ca sh... r!i! Bl.Fts tJ � � s . 388

- CT ._t � 169 13 � A . r~ to. is , zo the res <iei t an� s .oc �ho. d ar ... tte c 1 c p .t' <J r ~ te .1. v e, wn:tcb \'/"' ~ nlso ancte 5utere t exp\3.&.1 . frolo.~ tho corpor::J.tiun ' g:t�J5S inco e , ere 'w str � cti oly r~c 1~ an ta ./ J:� � 1 r , th.,., eJ. re , r clt:dlole in hi~ {l'O"' inco c our r~t . tho ; e,;q:�s .!1-n t e t&A � v 1 an e or p s s ble t e a i n . t l e - � t:.l ""r 1t un ~nc t:te t :x com 1entl ., r t 1e the.J �;; t1 e receipt ~u-ti: !1 c ss ty to m- i t is hi n, 389

D..!.C � s -G C E o . (; 4 � '3 a 1u6 or a tot ,v' .1..'., , 0 � r'jV� he l' ... '}() n"" 1 ��c.. / ' ./ � VG ' f 96 , C � G , � in .t .rr lat d , wo w1 1 i ct...s"' t ' e � j lr1 1 � or Il tte iJ 0!'1,.::) tl fh.li ,JJiU t�l.h- r rcce.s ing Cvd an,>�, ar cul1rl a. � 19 ul.i..l' ,,J � 6 at e pr 1 3 ' . 9:/J ( h . ' P� 2 , . 'I . A . r a � ) tb.� f llow- :rp us . -- -�~ ----- it 66 , 8 3� 2 29 ,196 . tr t u tb.e s 1 en rles 1decl - ~�e i .c mo o r. � J . rnn� t w .. ~� 9 be ause th ,.., r a ust ett to .. pl a il year n the saic t pa'' r li:~.e - 1 e t1e pros n c ntr llllJ.t; s ci..hol � r 1.f he illppi "e ~'i be Proc s inr C t Fr or... a ovi enc d ce , \<Te twr eo. t~1c-. t the sums 390

vs � v t - (, w:.>l<; ;. 0 � . 'Jlj of ' 6 , oj . y .n c.' c � a J. b � m .\ra ..o a c �a" "' U t r , es e ~..i �vc y , "' LL t � i:U J. �:...n.o f be�r zo- c s 1 �o �pe1 0 is � e ...>.1 a .I ... nt H.l. 8 1, � J. r a r le ,� n 59 , t e s 1 " u 1 i .. 0 .... i>.' ';( ' {., � t; :le e .i� v ,. 11 - ' 1 J:"l e 0 sin lA.>!llpa! to \,' lb. es . l!.X s . D 't.~.u U-1.) t con� e r, 1~ , . � r nota s )l' OVl ea wit s- cr t .0.11 'Cl 1� n fo en Sl.' � ~i ,, nt an r pr s ut tiur its ' . i.r net� , t .1er� ~ rB , re. el �u or: y d. .. , uo �vU per enn.tilll as re- t t ol 0 to !lav ~ De �r. � r.o tr u. t.~ e.1. racci ed by .. J r a..t1e a in 'j'; ') bee . ~e tt e Th vi X en lt \u� .v v c rw rs Wil o h re ll w11 L t.ho .l.nve"' � r,a t.. J.r i' rev ...w e n e .. s confir1..e th m. B e l r � ru , p. ' ;;;l ell s c..( o_,., . , 110 ~e er, th, e rece 1. pts v.rl vuuc ne t e � 11c i . a bo entr ie.., ana 1 ~6 1ere n t a e � 11 ble o s e.alli1n er bee us the r ser � 1un t h reef fte r ~ e. ( ) ) ears a.., 1ot 391

- ~TA 699 16 of tt J Ia~ Cv e � de fr r 'tne u"'t t '1at t (} ~;e l'' .i..777 �~ d. .'56 \JC s not ccv-r , b 110 lllv.cti �.; i )[J. l) resu 11 ' t ' "�' e ~rn.. .� ::.r.., � t c r~i '~ 1 T' �we bo l4 t tile .::IU....J o.:t' + ') ,uc..v . 0v (l e"' cot fOJ. L pa�r� of r . 1.ro.n .. ta � in"u ~a l.L l'.,)'; ' he- \4. . be 1 r 1e . i .{ea r . ). lH tJ r o t � 11 va e o o:uetc, L a c "I: d "'fd pro1;erty . f.~ � j4 , ' ' . ~4 . ver, lh.. a JJt.;jAU ~ t, L~.,o ~ . rt p s Ol" L-::... 'Y (...~ te :-~ vror:. r <"A ize ':::E. .Le tlC.!'CO c.: lA.'v Ulil, ~t ~ ,\; .. v, 1 .. ' "Y-�~- . tl.-) u. er & . " i u j (:::..Hl) ', . tne L ter,.~ 1 en . l . o ocK i!. tra e � � � � or " or v . rty 1 ~.~.c�1 w u d _Jl'...>' er.ty <"> 11 - .1. 1 tu 111 e.l. tory f tt e tut.p� cr !' 39 2

ld. 1 ')9 'i '.J1. H.... ':1 t c ... :;._ . . . , "1 ~e. r;, h1 ..~ ril t ""' '� ...;!' < i>ov 'U ..:~~. ~ trc!Jc r...r b.... ~i:tlot.s; I l'r J )(u�t y b �.:.~ in ~ne trade J.' ou~i.t.e .... s .) � VIti en !iUOJtr<.:t to al.L Wc;.f,t.e ,U J ; Jv . ec r, 'C._�. ti�.. l, !)l'U ~ 'GU ....... 'ul>~ c L.LuH ( ) ..1. i ....l l u tr~ h0V !U ; ~.-.. 4- . t.cr.l � es n , reat :>r t, wr et u~ l t 1~ ~:;.eu or ls tr l. e ~� t. io.t~ �1t ss t..e, th ! t � f) . I .!U Cot t�t 1t' the .case o : Car~ is Co . v. 393

l J.. O.l l. ', ..I.J .J .unu , . r� ., .. . t;; \i r , c er or �n ote~ .h. 'J. '{ th 0 ~ j. l~ .. � tt.. tJ c ...nvar '.I'h :. n...; �er� s t ~ l� Z'~ t .. . e I J. r:. ":1'� ,.... (I h u r _...._" . .. b� "i- ( 'f) ':.If ..t.e r' ( 394

- VIA .6 9 �::e 'ln t.w � '"' ct.i.vr:. Jl+ (u ) (. ) u � iUU~ L ,.., '1 .u ,.; .r . l ) u �~- 10 � 0 � ...t v - L h G ; '""e 0.~.� l";.j-:, . u v>-J.',- � , >-J-::~ v.Lvu l l (a ) (l) 'H.:. j )..,!./ J.,. J' ) 1 ' � .TI. 4 1o�/ e 1~'r� 2 V.I. ~.:.; (;;~ 1 ::l.P.?l..r l.nt. }.)<;\.- � l'. u! '"t' ( Q ' tv,l.l"� r"> ..... u. Lo vtl Jnw, 1. ..e Tt~u.:.: , lL ta c.:...... e ol' D. l . 1 n.U.lip::> v . lvJ. \...~ t�. l~,~ r Jl l.. .� t.:J.'L..... l ev ~�r.~.L, . ,_ .! L. . I l ) ) t!L � .., . J. .X CuLd' ue.Lu t;S ..l ~ .l...L.u"r~ "" vur .1\.J.i.Ull1 ubu ve tt at. t.b (:; ' t..cant l,Jt.s �.n '(:;.1' urc -'! ,.er�r:;. i~c.J.. ... by ~:e ,_,~ J.GLor r- �r ....1 a ... .... - ly ..L~ 1.� " ..:r:..<:'~r r ...,;,.. t -... .... .... -~~..;. C.L.t C CL1.r ;,{ .CCL>!-':.... t tv 1.[ L; ~�GU.., <. � . s s~ut8u. s.u \e , ac ut L.iJ,;:;; i.H .eH~ J. ~ .. -.er e a la r L) part vi' liC'L:l..T�.L.U::.l l' 1 ::> .:>t...~ �}.. ir;. tr� J. e a~� u .t. C-C..L. J:., , , _, ,c.,,~ .� .r . ..... ' l nr 'I'C"' l.f ev:i_\1 1 .. -:c ..,�_, �~t �, C' ..~~'Gil'., , t.l1"" :.,a ... . :., .Jf ocant ::.o:.,:.., ::.H Gver u uv.._ <..tt t .r vi'.L u. .r-1.1 ;_ � 1l 6 ~~ur~ 1~�6 tl ruuth l~~~ a e ~~ r ~uti ~ i\o evi - tt. .tcLC..2 ... ~t.i... G.t �.~e c t~e.Lu _vr..L.l,~.,l L.L.r �� .., � tdc.. � p �r e>G<"' .it b.l~ ir �.:;.:.., � : G C,V l' Jl 'UJl... dUUSGS , l� 1.t. .,. l-Ldl' .l[l.o..1.L.. , �4� ' '-' 'ee. . ~ .~:...H.L 0.> p ... Li..,u- e ~� � .: r -3llt<o J vur JJu.:;e!:.. 1' !' 8 nu,.nJ r Q..L' ;, E.v .... ::, prior L..., -:. ��,.;.i.� v'.! .. , ;_,,!',_ i..l fH'I..I}i i UL:.A.>-.1...:~:.; � th~ clr c lLI .::> L� uccs .... urrou.:...d.L ... J thO J. l' Bule le"J t a.5.f ,Jr Hl"" �, :.. t "I'i li.> i'rvi t 1..a � .L'-~ :.o "'cd. "S � l' ,_-:... .:.lJ..t G..!...u \.Yr l(..i vus ~ ~~ L .1ela ..�ur _LVE!:... tr c l :;. lJ ,r� �. u~.<.. s . r :i - l �. b) ~ . ra~ta in the etc., .Lr.. v �uer 0 Iu' ~. i t ;; r \l u<; t iv e ar.J.C... :llU 'I.. � bl<~ as a 395

u .t l..L~ - ~Tjt. .. � lv';J :;I . . u1 t.io � . t~e acquis t n cos u~ t iV fro t ale �f In i: a oniJ.acio . Cv se.. uan't; , the rdi ari ':�Q..li1 O;~. 1~1..' 1 '>2 � 1"\' all �e ly ea iz ~ by -tl- . ..' 1..iOl".t fro a0 f� ctua an leg4l .a sis. � he llo eu t. ucti 1 ,3�. 2 . J u! the theor that after the sale r .d c .ena.a ,.i aci er 31 , 19' , pe.tlt o...._ r;;;.> re n l r p rt � te e ry f res �~ond .nt on t i score is I.U1 nable . Ill t e f .ir...t e , pe t ner � l~,.s d. i �.co t rn � vW" t lf\t t eir i.nco e :fru faDtrrin urin ' tne ai yeur 1V bl "� t tt e 1 e : r ro uetion ex e 1se of ~-lt- , 31 . 5.3 wer LOt � i!Llcurr ~J. by p t tionar � In the s cond p ace, even �r 1 11 a cn1fa i lspcse or y petitioner l c o r 31 , 195 , the tbe tanuu1 � er still owne by t r n J.'f'Ja �1blo . As the. � c;; p us s w re sh'J l no s ad. 1 1 r.al inc e o pet - a r. t:1oter I' n the sa.i 396

""'"' lol i -10G9 o . (; >.>.>f.; i 'I' surcl aft;, .. s r v ~e ef'l- c i �net ir.~.cowe t es ue eti t . 0.1..er:) frou. 11 57 t � 1 ':1 l l 'ro . t[te Sea e o.t' 1.t w.~.u cl red l co ere, 11� wev...r, rap r . l'etur�1.s fvr ..,u � ~ ear~, a .u th, u 1" lor.cy .i.r:n.:vr. e ��� axes u he on -rare c , . 1':) ,':"::'. e1. r 1.. u der � 5v-62 o.t ti .... e .. t ec lvn '12 ... t b. l ever.ua ti de iJJ !JSO th ~c/O s rc ar e El i'raud penalty i ease �.1 ft.!lse 0.1' rr,_. u-e t r 1 w11lf ~l.i --a-. y t .I I '" . 01;, a, f l"ng '-' f ne ue ueu i.ac a ta.. t > ..l1Q Jears ~L')) I 1961, i c !.lSi e, el.i. b the f'r uuule t ~t �nt of he petJ..t.iu lel" .... to ep 1 e t1e Co rb.~. ent 0 la t.;;~ f l ta �e s . !Ol* over , fr u is r ~ us c uoo, oe u t� ined , t must be s po y c e r a 1 Ot V cin ,. ,..,I)' of . (...{e ubl"c � ..... r .' 'i ~ d. , <.. . H. . � L--216 ':i t ;:)ept . 2~, l 66 . ) ~ en ce w ..ataoever .JgS td � uceJ b.i re- s ur.l. e :1 tv ju � ifi the fr au ;enr;1 t y , the ; fO s �� ch r e Ou e es i" baze- le i'ter l n 1 al .is..; 1�"' , here B � s i l � Lte u 1 col. ec 1 le fro p i ~,ior..er!:. � he u - p 397

2 w � 11-, ef1ci nc .co e t xe an i nt r est s, t o wi t J �at ~o i t io n rn lr ei~t co. un -: - - � - - - - - - - - - - - - - - 9 , ov9-. 84 ud = Interest income f r om J � . m do .rru.teta ,:<. t:o . -------...---- - e er d.ee . ion -.;...--..-..-.-~-- .................. T e t a l e income f 1 -lr--Q-a-d- ----s-e-s-~e-d- ��--------- ---------- (! t ;;u: w t alr e� a ses se , s e p . 84 , DIR rec .) ~ e t . �con1e per retur n ---- - ------ --... ..- - It -73 , 78.3 . 44 da dd.ti n 1 inco ; t.tere.., t 1 ..c �e f J. � r anet . ---------------- -2~ , 993 . ~7 ------~- , 60 . u ceeds -------------~- ,l)u. ~ ltrtcre..;t p able et 1nccw r ecisi t 1 inco of lr ad7 esse sed - - - - --- - ------�------------l-l-i-y�__-e_-a_-r_-_s-..,..--_.--,.. ( t m Ul alrea y a&tiescea, sec � 95 , dl~ rec . ) - - -----~--------- 9l, (J 2. 5 61; , 993 . 9 - - --

co 1 . . . . . ....-- - - . ... .., _ _ _ ._. l ---------~---------- -- _2 , 9 .97 i- � t iu ---~--~~-~---~-~ .co�.�e o � -a-l-r~-a---J --a-~-~-e--s-e-d-------------------- : fl IJ.j ,) y� ~~rr _ ....-. -!' ____ .... _ _ _ ,..._ inc r:1e t x i ue fr0 . eti on t~ �or )0 oc ..~e t til. ec arc in c ( � l:;.C J.C c;f (:.L ' Y93 . }q fr m J . ~o . is v.rJ much le., ha t1e i el / 0 lt..uivia. al ir o e .:.a ne a l - 1~.,~. aou. Lu...... pe.rte:.. 1..s o tbe c r 1 ort t o�J . J.!; u � u 399 '

_ 1.1 e !r .. 1 � .lo 1 J ta. c. ... 4 i.JUS J . ...m~u 1,1~57 --~~----~--------~-- 0 1S9�56~c -__--..,.-,..-__-.-.,-__--_ T L -�---~------~ i ;;; '!:!ner v.ruo�oil ~ Ol' t i . t l . 1.1 L ..r� u c l t i..tl ut ...,r . ~,) .J � .s efiC.l.t">.uC.�' ' l.tCO anu 11~ 'tere~ <� fr I' '' t.J ,v i~11.. ., . v l c :;: 0 .I..' � t,n ~o.i ' aJ .OU..i: t 1.., hO . id ~ rr .. ) ( ~ ,h d.te th~ d 4 C.L.sion l tui 1 hirt:t .,I (.,J_f.;j cv .s �tt.. l <..-l� -:.:..cutur r (I .r ..,w.. ~l e o .� aue i � �...- ly tt � c , ;j tt !' 0 r I .... � J� a . ) I c nc emi .~ ) 400 ~"T 'Shill !J JU � 1 <�e ts

L c. ... o � . � u. ..tl �t h < s o lt ! clis:;e:nt ~ h ra. puct to t.h . p� t..~ vn uicn ho J (a) Ol ~t to 'r U� 0" tie trc. Un r or ea ~ c vt~ u i1 t e tr, 'e � az et . . r J.: l. 401

- ....�' ;1rovi r:a L .e \.l. n J ) f uc t t ur. � r or� lr t r u ert~ ~ u ~... ' l!��V t .... ..l~f:f l . o� j. \; ~Ql' harr ) ~al� ri.e :)- �e. ro.t;'h ( o :f .-:.i 10 0 .. ~;' ~VVi~.tJ... .(."..)....,....~)~ of t ~t.-- l 'f)(' J c l,;.U ~c. � 01" cor. v ,J.'tf.t:C'? , tv. 1e!\<~ ... /5 f ,eve ue . c . if. (. c�v.�it.: :.J' � x ...E ,:ula lor ) i r. Jr - uuce n .fu.J.l b.::-1 w: �iri :.t"V'-"1, 402

� 3 0 �' e o.e i v 11etl i <. \u.l .. , " 403