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Although control over the disposition of the transferred property
is significant to the assignment of income analysis, the ultimate
question is whether the transferor, considering the reality and
substance of all the circumstances, had a fixed right to income
in the property at the time of transfer. See Greene v. United
States, 13 F.3d 577, 582 (2d Cir. 1994); Allen v. Commissioner,
66 T.C. 340, 347-348 (1976).
2. The Right to Receive $22.50 a Share in Cash
On July 28, 1988, AHC, CDI Holdings, Inc. (CDI), and DC
Acquisition entered into the merger agreement. According to the
merger agreement, DC Acquisition would be merged into AHC, and
AHC would thereupon become a wholly owned subsidiary of CDI as
soon as practicable after DC Acquisition had purchased the stock
of AHC pursuant to the tender offer. The merger agreement
provided that each outstanding share of AHC stock, following the
purchase of AHC stock pursuant to the tender offer, would be
converted into the right to receive $22.50 a share in cash. On
August 3, 1988, DC Acquisition made a tender offer for the stock
of AHC at $22.50 a share. By the close of business on August 31,
1988, more than 50 percent of the outstanding shares of AHC stock
had been tendered or guaranteed. At that time, despite the
various contingencies to be discussed infra, we believe the
reality and substance of the merger agreement and the tender
offer indicate that the stock of AHC was converted from an
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