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Respondent contends that, if CDC was in an active business
prior to the change of ownership, the trade or business of CDC
after the change was not substantially the same as that conducted
prior to the acquisition. Respondent's primary argument in
support thereof is that CDC was not in the contract drilling
business but rather acquired assets at depressed prices to be
resold at a profit.
Respondent points to Clare Co. v. Commissioner, T.C. Memo.
1969-264, in which the taxpayer contended that it was “a viable
corporation, ready, willing and able and attempting to conduct
the same type of business it was engaged in prior to the change
in stock ownership.” The facts of Clare Co. are distinguishable
from those of the instant case. In Clare Co., the taxpayer,
prior to the change of ownership, was in the construction
business. After the change of ownership, the taxpayer sold all
of its construction equipment and bought river barges. The
taxpayer then rented out these river barges with the resulting
rental income accounting for 89 percent of its gross income for
the year after the change. CDC on the other hand maintained the
necessary equipment, including drilling rigs, rig yards, and
related rig equipment, so that at all times during the relevant
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