- 22 -
treated as one if at the time the first step was entered into,
there was a binding commitment to undertake the later step
(binding-commitment test), if the separate steps constitute
prearranged parts to a single transaction intended to reach the
end result (end-result test), or if the steps are so
interdependent that the legal relations created by one step would
have been fruitless without a completion of the series (mutual-
interdependence test). Id. at 1429-1430.
Respondent argues that the acquisition by CC Holdings of
Cruze’s stock in petitioner should be treated for Federal income
tax purposes as a redemption and that the $650,000 constituted
expenses incurred in connection with that redemption.
Alternatively, if the transaction is not treated as a stock
redemption, respondent argues that the expenses should be
capitalized due to significant long-term benefits to petitioner
and that no current deduction should be allowed in any year
before us.
Petitioner argues that for Federal income tax purposes the
purchase of Cruze’s stock by JC Investors did not constitute a
stock redemption and that the expenses should be deductible
either for 1992 or for 1993, the year in which JC Investors
disposed of its interest in petitioner.
We agree with respondent's primary argument.
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011