As stated, we conclude in this case that the net operating loss carryback deductions are assignable in specific part directly to gross income earned in Canada, albeit income of a prior taxable year. Accordingly, we think that we have observed scrupulously the law as it is set down in Missouri Pac., and restated in Chicago, Milwaukee R. R. v. United States, 404 F.2d 960, 186 Ct.Cl. 250 (1968). III.

The decision has been applied in this court to bond issuance costs generally. Chicago, Milwaukee R. Co. v. United States, 404 F.2d 960, 967, 186 Ct.Cl. 250, 262 (1968). The Supreme Court in its opinion said that discount and expense were both "factors in arriving at the actual amount of interest paid for the use of capital procured by a bond issue" which "must be added to the aggregate coupon payments in order to arrive at the total interest paid."

We agree. This issue is governed by our decision in Chicago, Milwaukee, St. Paul and Pacific R. R. v. United States, 404 F.2d 960, 186 Ct.Cl. 250 (1968). In that case, we held that issuance expense would be treated as would discount, and this being so, there could be no carryover of debt discount or issuance expense if the maturity value of the new bonds is less than the amount that was received when the old securities were issued.

Mimeo 58, which explicitly excludes donated property from straight-line depreciation, is entwined with the terms letter and forms an integral part of the mutual understanding for the change-over from retirement accounting. See Chicago, Milwaukee, St. Paul Pacific R. R. v. United States, 186 Ct.Cl. 250, 266-272, 287-294, 404 F.2d 960, 969-972 (1968). One of those accepted conditions was the exclusion of donated property.

In an analogous situation, we ignored the issuance of preferred stock in determining whether there was a carry-over of debt discount and compared only the maturity value of new bonds and cash with the face value of the old bonds given up in the exchange. Chicago, Milwaukee, St. Paul and Pacific R.R. v. United States, 186 Ct.Cl. 250, 263, 404 F.2d 960, 967 (1968). Common stock is not a fixed debt obligation, and the plaintiff made no definite obligation for the future by issuing those shares.

Once the reorganization became effective, all unamortized discount on the old securities was carried forward and amortized during the life of the new securities.See, e.g., Chicago, M., St. P. Pac. R.R. v. United States, 404 F.2d 960, 186 Ct.Cl. 250 (1968), where this court gave its approval to the idea of carrying forward old discount and amortizing it along with new discount over the life of the new bonds. Plaintiff's claim in this case is premised upon the fact that the aggregate maturity value of the new bonds issued pursuant to the reorganization plan was greater than the value of the securities received in exchange, as determined by New York Stock Exchange price quotations.

The government has not appealed the deductibility of certain other expenses and, therefore, the government's computation of net income from Mexico is not precisely correct. The District Court adopted the taxpayer's method of allocation. It held that running repairs performed in Mexico should be assigned directly to income earned in that country, and that property taxes paid to by the railroad to the various states of the United States should be assigned directly and solely to income earned in the United States. Its decision on both these issues was contrary to earlier decisions of the Court of Claims. See, Missouri Pacific Railroad Company v. United States, supra (running repairs and state property taxes), and Chicago, Milwaukee, St. Paul Pacific R. Co. v. United States, 404 F.2d 960 (Ct.Cl. 1968) (running repairs). Before discussing the specific issues raised on this appeal, we review the law with respect to the burden of proof.

See Vulcan Materials Co. v. United States, 446 F.2d 690, 693 (5th Cir.), cert. denied, 404 U.S. 942, 92 S.Ct. 279, 30 L.Ed.2d 255 (1971), Mills Estate, Inc. v. Commissioner, 206 F.2d 244, 246 (2d Cir. 1953), E.I. du Pont de Nemours Co. v. United States, 432 F.2d 1052, 1059 (3d Cir. 1970).See Chicago, Milwaukee, St. Paul Pacific Railroad Co. v. United States, 404 F.2d 960, 968, 186 Ct.Cl. 250 (1968), Denver Rio Grande Western Railroad Co. v. Commissioner, 38 T.C. 557, 576-82 (1962), Record Realty Co. v. Commissioner, 6 T.C. 823 (1946). Placid does not attempt to dispute the authority that reorganization expenses are capital, but instead raises the issue of whether Placid's bankruptcy constituted a reorganization.

If respondent had intended a contrary result, he should have made his intention clearer by setting out the exclusion of interest and taxes during construction as an express condition in the Terms Letters. As an example of the binding effect of an express condition in the terms letters, see Chicago, Milwaukee, St. Paul & Pacific R. Co. v. United States, 404 F.2d 960, 969-972 (Ct. Cl. 1968), where the taxpayer was held to be bound by the RATES OF DEPRECIATION set forth in the terms letters. We also reject respondent's argument that because petitioner excluded amounts attributable to interest and taxes during construction as part of its depreciable basis in schedules it submitted with respect to its election of certain treatment under section 94 of the Technical Amendments Act of 1958, Pub. L. 85-866, 72 Stat. 1606, or because petitioner did not claim deductions based on the inclusion of such amounts in its submitted returns over the years, petitioner is estopped