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Both parties have cited and relied on various revenue
rulings. We have considered them, but find that they are
factually distinguishable from this case. Hence we have placed
no reliance on them in reaching our conclusion.
We also find Example (1) of section 1.355-2(d)(4), Income
Tax Regs., to be distinguishable from the facts of the instant
case. In Example (1) corporation X, whose stock was owned solely
by individual A, distributed the stock of Y, a wholly owned
subsidiary of X, to A, so that individual B, a key employee,
could afford to purchase stock in X. After the distribution of
the Y stock, A sold some of his X stock to B. Because X could
have issued additional shares to give B an equivalent interest in
X, the sale of X stock by A is deemed to be substantial evidence
of device, and the transaction is considered to be used
principally as a device. Here, by contrast, no additional stock
could have been issued by Homes because Mr. Deckard did not want
Homes' stock, Homes could not be a stockholder of Chapel under
Illinois law, Mr. Pulliam and Homes would not sell Homes' stock
to Mr. Deckard, and, in any event, Mr. Deckard could not afford
to purchase any meaningful amount of Homes' stock. The entire
distribution in Example (1) of section 1.355-2(d)(4), Income Tax
Regs., was made so that the key employee could afford to buy
stock in the distributing corporation, as opposed to the
controlled corporation in this case. As a result, the fact
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