- 27 -
The March 7, 1986, agreement to exchange stock expressly
refers to the March 6, 1986, transfer of the glass division to
LOF Glass and establishes the integrated nature of these
transactions.
Seven weeks later, on April 28, 1986, the exchange of stock
that had been agreed to on March 7, 1986, was consummated.
After April 28, 1986, LOF Glass was no longer part of LOF’s
affiliated group and no longer was included in LOF’s consolidated
Federal income tax return.
It is apparent that the transfer of the glass division to
LOF Glass and the agreement one day later to transfer the stock
of LOF Glass outside the LOF affiliated group constituted an
integrated transaction intended to move the glass division (and
the related section 38 property) outside of LOF’s affiliated
group.
Based on this stipulated factual record and on this issue on
which petitioner has the burden of proof (see Rule 142(a)), only
one conclusion can be reasonably reached -- namely, that in spite
of the qualification of the transaction as a reorganization under
section 368(a)(1)(D)(allowing LOF to avoid recognizing taxable
gain or loss on the transfer of the glass business and allowing
LOF and Pilkington Holdings to avoid recognizing taxable gain or
loss on their exchange of stock), the substance of the integrated
transaction by which LOF’s glass division in 1986 was transferred
outside the LOF affiliated group constituted a disposition of
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011