Chicago Mercantile Exchange - Page 2




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               Dennis E. Frisby, Ira Marcus, Jack Esses, and Thomas C.                
          Borders, for petitioner.                                                    
               Robert M. Ratchford, for respondent.                                   


                                 MEMORANDUM OPINION                                   

               LARO, Judge:  Respondent moves for summary judgment in his             
          favor, arguing that petitioner has no affiliates within the                 
          meaning of section 204(a)(7)(C) of the Tax Reform Act of 1986               
          (TRA), Pub. L. 99-514, 100 Stat. 2085, 2155, because it is not a            
          member of a controlled group of corporations, which, respondent             
          asserts, is a requirement of that section.  We will deny                    
          respondent’s motion.  We hold that a taxpayer need not be a                 
          member of a controlled group of corporations to have affiliates             
          for purposes of TRA section 204(a)(7)(C).  Unless otherwise                 
          stated, section references are to the TRA.                                  
                                     Background1                                      
               Petitioner is a corporation organized under the General Not            
          For Profit Corporation Act of the State of Illinois to operate a            
          commodity exchange.  It is a designated contract market that                
          provides and regulates a commodity exchange in Chicago, Illinois,           
          where futures contracts and options on futures contracts are                


               1 All facts were stipulated by the parties in stipulation              
          100 of the second supplemental stipulation of facts.                        




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