ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 137

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          taxing statutes generally."  Weller v. Commissioner, 270 F.2d               
          294, 297 (3d Cir. 1959), affg. Emmons v. Commissioner, 31 T.C. 26           
          (1958) and Weller v. Commissioner, 31 T.C. 33 (1958); see also              
          Knetsch v. United States, 364 U.S. 361 (1960)(interest                      
          deduction); Higgins v. Smith, 308 U.S. 473 (1940) (loss deduction           
          on sale to wholly owned corporation); Weyl-Zuckerman & Co. v.               
          Commissioner, 232 F.2d 214 (9th Cir. 1956), affg. 23 T.C. 841               
          (1955)(mineral rights transferred to a wholly owned subsidiary);            
          Braddock Land Co. v. Commissioner, 75 T.C. 324 (1980)                       
          (shareholders-employees' forgiveness of accrued salaries,                   
          bonuses, and interest owed by corporation in complete                       
          liquidation);  David's Specialty Shops v. Johnson, 131 F. Supp.             
          458 (S.D.N.Y. 1955)(affiliated corporations).  The tax statutes             
          apply only "to transactions entered upon for commercial purposes            
          and 'not to * * * transactions entered upon for no other motive             
          but to escape taxation.'"  Weller v. Commissioner, 270 F.2d supra           
          at 297 (quoting Commissioner v. Transport Trading & Terminal                
          Corp., 176 F.2d 570, 572 (2d Cir. 1949), revg. 9 T.C. 247                   
          (1947)).  Thus, transactions will only be recognized for tax                
          purposes if there is some "tax-independent purpose" for the                 
          entire transaction.  See Sheldon v. Commissioner, supra at 759.             
          Only after we conclude that a transaction has economic substance            
          will we consider the transaction's tax consequences under the               
          Code.  See Rice's Toyota World, Inc. v. Commissioner, 752 F.2d              






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