Rev. Rul. 68-465

X , a foreign corporation, borrowed money from Z , a domestic bank. The loan was evidenced by a promissory note of X payable in installments over a period of years. The loan agreement provided that X is to reimburse Z for the amount of the interest equalization tax that Z is required to pay upon the acquisition of the debt obligation of X .

Held, in determining the `actual value' of the foreign debt obligation, for purposes of computing the amount of the interest equalization tax imposed by section 4911(a) of the Internal Revenue Code of 1954, the interest equalization tax paid by Z for which it is to be reimbursed by X is not to be taken into account.