Reynolds Metals Company and Consolidated Subsidiaries - Page 29

                                        - 29 -                                         
          to compete.  Petitioners' reliance on Republic Petroleum Corp. v.            
          United States, 397 F. Supp. 900, 919-920 (E.D. La. 1975), affd.              
          in part and revd in part 613 F.2d 518 (5th Cir. 1980), is                    
          misplaced as that case involved only the acquisition of a single             
          asset, stock.                                                                
               Nor are we impressed with petitioners' attempt to salvage               
          their position by asserting that the excess value involved herein            
          represented an expenditure by Metals to discharge an obligation              
          incurred in furtherance of a business purpose of its own.                    
               Petitioners argue that Metals incurred the exchange                     
          obligation, and subsequently made the stock outlay on its own                
          behalf, because it sought to increase its supply of Canadian                 
          aluminum.  It is, however, more accurate to state that Metals                
          guaranteed the exchange of its stock so as to make RMECC's                   
          debentures marketable in the Eurobond market,8 the sale of which             
          enabled RMECC to acquire a majority of CBA's stock while BA, 48              
          percent owned by Metals, was able to raise cash to build new                 
          aluminum plants by selling its CBA stock to RMECC.  The link that            
          petitioners fail to explain is why holding an 83-percent interest            
          in CBA, through RMECC, its 100-percent owned subsidiary, improved            
          its supply of Canadian aluminum as compared to when Metals owned             


          8  For discussion of the Eurobond market see New York State Bar              
          Association, Tax Section, Committee on U.S. Activities of Foreign            
          Taxpayers, "The Withholding of Tax on Interest Paid by U.S.                  
          Borrowers to Foreign Lenders," 6 Intl. Tax J. 126, 127 (1979).               





Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  Next

Last modified: May 25, 2011