- 49 -
In support of the exception that they carve out of their mechani-
cal test, petitioners assert:
The six matters requiring approval of each class
of directors in the case of Alumax covered a narrow set
of actions, such as mergers, material acquisitions and
dispositions and transactions with affiliates, that
frequently are the subjects of mechanisms, such as
class voting, intended to protect minority stockhold-
ers. * * * They fall far short of the unlimited list
of matters on which the preferred stockholders could
have voted in Erie Lighting [Co. v. Commissioner, 93
F.2d 883 (1st Cir.), revg. 35 B.T.A. 906 (1937)], or
would have been prevented from voting on in [Rudolph]
Wurlitzer [Co. v. Commissioner, 81 F.2d 971 (1936),
affg. 29 B.T.A. 443 (1933)], had those stockholders
known of and tried to exercise their voting rights.
In urging application of their mechanical test, petitioners
not only contend that the Court should ignore the respective di-
rector and stockholder class voting that was required on the
director and stockholder restricted matters, they also assert
that we should disregard (1) the mandatory dividend provision and
(2) the objectionable action provision. That is because, accord-
13 (...continued)
appear to address that requirement. Although not altogether
clear to us, it appears, and we shall assume, that petitioners
contend in their reply brief that the stockholder class voting
requirement should be ignored for purposes of sec. 1504(a)(1) for
the same reasons that petitioners claim the director class voting
requirement should be ignored. Apparently, petitioners' position
with respect to the stockholder class voting requirement also was
difficult for the IRS to grasp. We draw this conclusion because
in Tech. Adv. Mem. 94-52-002 (Aug. 26, 1994), which was issued by
the IRS to petitioners on the question under sec. 1504(a)(1)
presented here, the IRS noted that petitioners had taken incon-
sistent positions as to whether "the Charter required each class
of shareholders to approve the Restricted Matters, at times
seeming to acknowledge the existence of this requirement and most
recently disputing its existence."
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