- 14 - 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 therePage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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