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Petitioners argue that Hudspeth v. United States, 471 F.2d
275 (8th Cir. 1972), and our decision in Estate of Applestein v.
Commissioner, 80 T.C. 331 (1983), stand for the proposition that
the right to merger or liquidation proceeds “matures” or “ripens”
under the anticipatory assignment of income doctrine upon the
occurrence of a shareholder vote approving the transaction.
Petitioners assert that, in the present case, the consent of the
sole director of DC Acquisition to a resolution stating the terms
of the merger, dated October 12, 1988, was tantamount to a vote
by the shareholders of AHC for purposes of applying the legal
reasoning of Hudspeth and Estate of Applestein, and, therefore,
the right to receive merger proceeds did not mature or ripen
until that time.
The principle set forth in the cases cited by petitioners is
not as formalistic as petitioners assert. Those cases stand for
the proposition that the reality and substance of events
determine tax consequences. The date of the shareholder votes in
Hudspeth v. United States, supra, and Estate of Applestein v.
Commissioner, supra, was crucial to determining the reality and
substance of events; however, we do not believe that application
of the anticipatory assignment of income doctrine is conditioned
on the occurrence of a formal shareholder vote. The shareholder
vote in both cases was considered sufficient to constitute a
severance of the economic gain from the investment in the
corporation, Hudspeth v. United States, supra at 279; see Estate
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