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concluded that liability for the principal of debentures issued
by the subsidiary remained outstanding after their acquisition by
the parent in exchange for the latter's stock. Respondent seeks
to distinguish Husky Oil Co. because of language in the indenture
relating to the subordination of the converted debentures, see
id. at 735, which is not present in the debenture involved
herein. We are satisfied, however, that the presence of this
language was not the exclusive basis for our conclusion that the
debentures survived in the hands of the parent. Moreover, we are
satisfied that any gap in the indenture involved herein by reason
of the omitted language is filled by at least one other
provision, i.e., the parenthetical clause in section 2.08 of the
within debenture, see supra p. 9, which is omitted from the
comparable provision in the debenture in Husky Oil Co. v.
Commissioner, 83 T.C. at 721.
Further support for our conclusion can be found in
International Telephone & Telegraph v. Commissioner, 77 T.C. 60
(1981), supplemented by 77 T.C. 1367, affd. per curiam 704 F.2d
252 (2d Cir. 1983), as interpreted by the Court of Appeals for
the Second Circuit in ITT Corp. v. United States, 963 F.2d 561
(2d Cir. 1992), revg. 90-1 USTC par. 50,214 (S.D.N.Y. 1990),
which is further discussed later in this opinion (infra pp. 22-23
and 25-26). In that case, the parent exchanged its stock for
debentures of its subsidiaries in accordance with the terms of
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