July 9, 2003

Brazil's industrial production rose 0.1 percent in May compared with April, but fell 0.3 percent from May 2002; industrial production increased 0.6 percent from January to May, while 12-month period ended in May, figure rose 2.7 percent (S)2

Nobel Prize-winning economist Myron S Scholes who was partner in Long-Term Capital Management, hedge fund whose 1998 collapse threatened global financial panic, testifies in trial that will determine whether he and his partners must pay $56 million in taxes and penalties; trial is important test of government's resolve in its battle against tax shelters; Scholes testifies that tax shelter of hedge fund was legitimate; shelter involved acquiring stock in four major companies owned by three people in London who participated in separate computer-leasing tax shelter; stock had value of $375 million for tax purposes but just $4 million in open market; Long-Term partners used $106 million of tax value in 1997 to wipe out equal amount of gains from partnerships' investments; Internal Revenue Service audit declared deal elaborate and clever scam; is seeking $40 million in taxes, plus another $16 million in penalties; photo (M)

Small store owners are being relocated from their stores along Eighth Avenue to make way for new headquarters for The New York Times; New York State, which took title to property by eminent domain, has presented modest financial packages to help stores relocate, but provids no compensation for loss of future business; some businesses have moved only a couple of blocks away, but for locksmith Teddy Pazooki, it is too far from his former prime location (M)

Harvey Araton Sports of The Times column discusses charges against Los Angeles Lakers guard Kobe Bryant, whose otherwise untarnished record and impeccable reputation could be seriously damaged if charges of sexual assault are not cleared; notes that in addition to vulnerability of Bryant's image, NBA should be concerned that justice is served (M)

Dana Corp, once leading independent maker of automobile parts, is target of $2.2 billion hostile takeover bid by smaller rival ArvinMeritor after rebuffing acquisition discussions; news of offer prompts speculation that Dana will fetch much higher price and that other companies and even investment firms might enter fray; ArvinMeritor chief executive Larry Yost comments on earlier merger talks with Dana chief executive Joseph Magliochetti; photos (M)