Custom Chrome, Inc. and Subsidiaries - Page 23

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               The evidence indicates that CC Acquisition was formed as a             
          subsidiary of CC Holdings solely to facilitate CC Holdings'                 
          acquisition of the stock in petitioner.  CC Acquisition was                 
          incorporated only 10 days prior to the LBO, and CC Acquisition              
          did not conduct any activities unrelated to the LBO during the              
          short period of its existence.                                              
               The several integrated steps of the LBO involving                      
          CC Acquisition -- its formation, its receipt of financing, its              
          merger into petitioner, and petitioner's assumption of its                  
          liabilities -- constituted prearranged integrated steps to                  
          facilitate the acquisition of the stock of petitioner, and these            
          steps were mutually interdependent.                                         
               We note that other than the formation of CC Acquisition,               
          which occurred 10 days prior to the LBO, the remaining steps to             
          the transaction essentially occurred simultaneously on August 25,           
               Because CC Acquisition was formed merely as a transitory               
          corporation to facilitate the LBO, we conclude that                         
          CC Acquisition and the steps of the transaction involving                   
          CC Acquisition should be disregarded for Federal income tax                 
          purposes.  In effect, the transaction is to be treated for                  
          Federal income tax purposes as if petitioner received loans                 
          directly from FNBB and then used $16.75 million of the loan                 
          proceeds to redeem the shares of stock that were held by Cruze.             

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