122 T.C. No. 19
UNITED STATES TAX COURT
DOVER CORPORATION AND SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12821-00. Filed May 5, 2004.
D and H, United Kingdom corporations, were
controlled foreign corporations with respect to P. H
was a wholly owned subsidiary of D. In 1997, D sold
the stock of H to an unrelated third party. In 1999, P
requested that H be granted an extension of time to
retroactively elect to be treated as a “disregarded
entity” pursuant to sec. 301.7701-3, Proced. & Admin.
Regs., effective “immediately prior to” D’s sale of the
H stock. R granted the requested extension of time on
Mar. 31, 2000. H’s retroactive disregarded entity
election was filed on or about Oct. 10, 1999. Pursuant
to that election, there was, for Federal tax purposes,
a deemed sec. 332, I.R.C., liquidation of H followed
immediately by D’s deemed sale of H’s assets, rather
than a sale by D of the H stock.
Held: In light of R’s administrative guidance
pertaining to the tax effects of a liquidation governed
by secs. 332 and 381, I.R.C., D’s deemed sale of H’s
assets constitutes a sale of property used in D’s trade
or business within the meaning of sec. 1.954-
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