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such property to T. Such sale will not cause section
47(a)(1) to apply.
* * * * * * *
Example (3). Assume the same facts as in example
(1), except that P, S, and T continue to file
consolidated returns through 1971 and in such year T
disposes of the property to individual A. Section
47(a)(1) will apply to the group * * *
* * * * * * *
Example (5). Assume the same facts as in example
(1), except that in 1969, P sells all the stock of T to
a third party. Such sale will not cause section
47(a)(1) to apply.
It is clear that the mere transfer of section 38 assets
within a consolidated group does not trigger recapture. Sec.
1.1502-3(f)(2), Income Tax Regs.; see also sec. 47(b); Tandy
Corp. v. Commissioner, 92 T.C. 1165 (1989); sec. 1.47-3(a),
Income Tax Regs.
It is equally clear from Example (3) of the regulations that
a transfer of the section 38 assets by LOF Glass, Inc., to
Pilkington Holdings would have triggered the recapture of the
investment tax credit. In the same vein, the language of Example
(5) without more would dictate that the transfer of the stock of
LOF Glass, Inc., to Pilkington Holdings would not trigger the
recapture of such credit. In point of fact, the application of
Example (5) to the instant case is affected by a revenue ruling
and the opinions of two Courts of Appeals approving that ruling.
In order to facilitate an understanding of the positions of the
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