Earle E. Murphy - Page 16

                                               - 16 -                                                  
            corporation's intent to do so.  Petitioner did not file his                                
            amended return until March 5, 1991.  Against this backdrop, it is                          
            difficult to believe that petitioner did not intend to liquidate                           
            FSRC.  Rather, it appears that petitioner was searching for a way                          
            to avoid the shareholder-level tax consequences of his decision                            
            to liquidate and that his decision to file an amended return is                            
            nothing more than ex post facto tax planning.                                              
                  Accordingly, we find that petitioner liquidated FSRC in                              
            1988.  Having chosen to do so, petitioner must now accept the tax                          
            consequences of his choice.  Therefore, we sustain respondent's                            
            determination that petitioner has long term capital gain to the                            
            extent that the distribution he received exceeds his adjusted                              
            basis in his stock.  See secs. 331(a); 1001(a).                                            
                  Petitioner argues that the transfer of FSRC's assets to LPRC                         
            and its dissolution qualified as a tax-free reorganization under                           
            section 368(a)(1).  Having just determined that there was a                                
            complete liquidation of FSRC, it necessarily follows that the                              
            transaction cannot qualify as a reorganization under the                                   
            provisions of 368(a)(1), because a "liquidation is the antithesis                          
            of reorganization."  Mascot Stove Co. v. Commissioner, 120 F.2d                            
            153, 156 (6th Cir. 1941) (emphasis added), affg. 40 B.T.A. 1057                            
            (1939).  Moreover, in order to qualify for tax-free treatment, a                           
            shareholder must exchange his or her stock pursuant to a plan of                           
            reorganization.  Sec. 354(a)(1).  The requirement of a plan of                             
            reorganization "is to be taken as limiting the nonrecognition of                           




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011