Rev. Rul. 72-363

The taxpayer, a United States investment company, entered into a loan agreement with other United States banks, the Export-Import Bank (an agency or instrumentality of the United States), and Y, a foreign corporation, whereby Y borrowed 85x dollars (United States dollar loans) from the participating banks for the purpose of purchasing materials and equipment produced in the United States and for services performed by United States persons in connection with the construction and operation of a manufacturing plant in the country of Y's incorporation. The term of the loans, in each case, was for 5 years. The loan agreement provided for a certification procedure whereby each request for a disbursement of funds to Y from a participating bank must be accompanied by a statement and certification, in a prescribed form, setting forth the name and address of the United States exporter to which Y has paid, or will pay, the funds requested. In addition, the loan agreement provided that Y must cause the United States exporter to deliver a copy of the certificate and invoice to the participating banks. The Export-Import Bank participated in the United States dollar loans to Y to the extent of 50 percent.

Held, the interest equalization tax imposed by section 4911(a) of the Internal Revenue Code of 1954 is inapplicable to the debt obligation acquired by the taxpayer and the other United States banks from Y under the loan agreement, in the instant case, by reason of section 4914(c)(1)(A) of the Code.