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BEGHE, J., dissenting: Having joined Judge Swift's dissent,
I add a few words in an effort to provide some further support
and explanation. The case at hand is an appropriate occasion to
apply the intent, end result, integrated transaction version of
the step-transaction doctrine to support a finding of early
disposition that results in ITC recapture.
Petitioner's initial drop-down to LOF Glass of the glass
business and its section 38 assets, which occurred on March 6,
1986, was followed 1 day later by the single-spaced, 45-page,
March 7, 1986, agreement for the split-off exchange of shares of
petitioner for shares of LOF Glass by Pilkington Holdings. The
split-off occurred on April 28, 1986, pursuant to that agreement,
as amended in immaterial respects. Although the parties
stipulated that the drop-down occurred for valid business
reasons, reasons that were presumably independent of the
impending divestiture, there were no substantial conditions in
the March 7, 1986, agreement to consummation of the split-off.4
The majority, uncritically following our opinion in Walt
Disney, Inc. v. Commissioner, 97 T.C. 221 (1991), revd. 4 F.3d
735 (9th Cir. 1993), assumes an unwarranted equivalence between
the two events described in the section 1502 regulation examples
4 Expiration of all Hart-Scott-Rodino waiting periods, receipt
of tax opinions that the split-off would be a tax-free exchange
under section 355, and satisfaction of all other stated
conditions, must have occurred or have been waived between March
6 and April 28, 1986.
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