- 54 -
(2)(A).14 To the contrary, Erie Lighting Co. v. Commissioner,
supra, the principal case on which both parties rely, supports
respondent's position that, in the present case, this Court
should examine all of the facts surrounding the management of
Alumax and the voting rights of the Alumax class B common stock,
the Alumax class C common stock, the Alumax board, and the
members of that board in order to determine whether the Alumax
class C common stock owned by the Amax group stockholders pos-
sessed "at least 80 percent of the voting power of all classes of
[Alumax] stock" within the meaning of section 1504(a)(1).
In Erie Lighting Co. v. Commissioner, supra, the court
addressed whether the preferred stock issued by the Erie Lighting
Company (ELC) was voting stock or nonvoting stock for purposes of
the applicable consolidation provisions. In resolving that
issue, the court observed:
The purpose of the provisions relating to affili-
ated companies was to enable corporations under one
management to make a consolidated return as though they
were a unit in transacting business, and to avoid such
a manipulation of intercompany transactions as would
14 Petitioners do not cite Hermes Consol., Inc. v. United
States, 14 Cl. Ct. 398 (1988), even though they contend that if
respondent's position were adopted in the present case, the
application of many other Code provisions requiring "precise,
percentage determinations of voting power" would be called into
question. In Hermes, the court determined the voting power of
certain stock for purposes of sec. 269(a) by examining its right
to vote in the election of directors and its right to approve or
disapprove fundamental changes in corporate structure, although
the court acknowledged that the former factor was "more indica-
tive" of that voting power than the latter factor. Id. at 405-
407.
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