- 13 -
Against the foregoing background, we proceed to consider the
positions of the parties. Relying on the position we took in
Walt Disney Inc. v. Commissioner, supra, petitioner contends that
the regulations, section 1.1502-3(f)(2) and (3), and Example (5)
in particular, Income Tax Regs., are dispositive and that the
step transaction doctrine has no application herein. Respondent,
relying on Rev. Rul. 82-20, supra, and the status accorded it by
the Courts of Appeals for the Second and Ninth Circuits in
Salomon, Inc. v. United States, supra, and Walt Disney Inc. v.
Commissioner, supra, argues in effect that Rev. Rul. 82-20,
supra, operates independently of Example (5) and should control
and that, in any event, the application of the step transaction
doctrine should result in the recapture by petitioner of the
investment tax credit. We agree with petitioner.
With all due respect, we disagree with both the result and
the reasoning of the Courts of Appeals and adhere to the position
we took in Walt Disney Inc. v. Commissioner, 97 T.C. 221 (1991).
We think that the fact that the transfer of the assets and the
transfer of the stock occurred in the same, rather than
different, taxable years does not provide a meaningful basis for
distinguishing Rev. Rul. 82-20, supra, from Example (5) of the
regulations. Indeed, as we have already pointed out, see supra
pp. 9-10, we specifically refused to give weight to this element
in Walt Disney Inc. v. Commissioner, supra. Our continued
adherence to this point of view is reinforced by the fact that
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