Charles L. Fields and Barbara S. Fields - Page 14

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          Petitioner and Dr. Young informed Finley Kumble that they did not           
          want to ignore CAI's existence.                                             
               On October 27, 1980, attorneys from Finley Kumble met again            
          with petitioner and Dr. Young.  In a letter bearing the same                
          date, Finley Kumble explained that the organization and operation           
          of CAI departed dramatically from the basic organization and                
          operation of a foreign corporation because:  (1) CAI was                    
          organized after the business activity of locating a source of               
          crude oil was well advanced and (2) CAI's primary business                  
          activities were carried on in the name of BarSon.  Given the                
          factual pattern of CAI's organization and operation, the letter             
          stated, the Commissioner could argue that the assignment of                 
          income doctrine required that the income received from ABL be               
          taxed to BarSon or, alternatively, that section 367 provided that           
          petitioner and Dr. Young's transfer of their contractual rights             
          to CAI was a taxable transfer.  Finley Kumble advised that each             
          theory created a substantial tax exposure to BarSon and to                  
          petitioner and Dr. Young individually.                                      
               In a letter to petitioner dated December 9, 1980, Finley               
          Kumble reiterated its advice that the organization of CAI in                
          midstream created dangerous ambiguities.  Finley Kumble cautioned           
          petitioner and Dr. Young that "defensive planning" had been                 
          undertaken to deal with what had already occurred, that there               








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