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about October 14, 1988, pursuant to a consent of the sole
director of DC Acquisition to a resolution stating the terms of
the merger, dated October 12, 1988. AHC thereupon became a
subsidiary of CDI. Sybil Ferguson became president of AHC, and
Roger Ferguson became a consultant for AHC. In addition, Roger
and Sybil Ferguson became members of AHC's executive committee
and CDI's board of directors.
OPINION
I. Introduction
A. Issue
Petitioners donated appreciated stock in American Health
Companies, Inc. (AHC), to the Church of Jesus Christ of the
Latter Day Saints (the Church), the Michael Ferguson Charitable
Foundation, and the Roger and Sybil Charitable Foundation
(collectively, the Charities). The Charities subsequently sold
that stock to DC Acquisition Corp. (DC Acquisition) pursuant to a
tender offer. The sole issue for decision is whether petitioners
are taxable on the gain in the stock transferred to the Charities
under the anticipatory assignment of income doctrine.
Petitioners bear the burden of proof. Rule 142(a).
B. Arguments of the Parties
Petitioners contend that they are not taxable on the gain in
the stock transferred to the Charities. First, relying on our
decision in Palmer v. Commissioner, 62 T.C. 684 (1974), affd. on
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