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parties and our views in respect thereto, we shall first discuss
the ruling and the two Courts of Appeals opinions.
In Rev. Rul. 82-20, 1982-1 C.B. 6, section 38 assets were,
pursuant to a prearranged plan, transferred by the parent
corporation to a subsidiary within a consolidated group in
exchange for stock of the subsidiary. Immediately thereafter,
the stock of the subsidiary was distributed to one of the two
shareholders in exchange for his stock in the parent. It was
assumed that the subsidiary would continue to use the section 38
assets in the same trade or business. Although the ruling
recognized that the transactions qualified under sections
355(c)(1) and 368(a)(1)(D), it held that the ITC recapture
provision of section 47(a)(1) applied on the ground that there
was a planned transfer of the property outside the group.
Without making any reference to Example (5), the ruling reasons:
Although section 1.1502-3(f)(2)(i) of the regulations
creates an exception for transfers of section 38
property between members of a consolidated group that
would otherwise be dispositions under section 47(a)(1),
the exception is premised on the assumption that the
property is remaining within the consolidated group.
When there is no intention at the time of transfer to
keep the property within the consolidated group, the
transaction should be viewed as a whole and not as
separate individual transactions. * * * [Rev. Rul.
82-20, 1982-1 C.B. 7.]
A factual situation similar to that involved herein was
subjected to scrutiny by this Court in Walt Disney Inc. v.
Commissioner, 97 T.C. 221 (1991), revd. 4 F.3d 735 (9th Cir.
1993). In holding that there was no ITC recapture upon the
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