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integrated, mutually dependent steps in an overall plan. We
agree. Indeed, petitioners do not characterize it differently.
Respondent, however, seeks to have the transactions
recharacterized for tax purposes using either the step
transaction or the substance-over-form doctrine. Respondent
urges us to reject the form adopted by the parties. That form
reflects events that actually happened, in favor of what
respondent characterizes as the substance of the transaction.
Respondent summarizes his position as follows:
The substance of this transaction should be determined
by applying the terms of the [f]inal Merger Agreement
and the Purchase and Sale Agreement in tandem, since
the agreements were completely interdependent, and the
steps of the transaction occurred simultaneously.
Viewing this transaction as a whole, TBS should be
treated as making a capital contribution to MGM
equivalent to the value of UA. * * * Further, in a
transaction which is in substance a bootstrap
acquisition, the portion of Tracinda's MGM stock equal
in value to the UA stock was redeemed by MGM in
exchange for the UA stock. * * *
In respondent's recharacterization of the "substance of the
transaction", MGM is deemed to have distributed its UA stock to
Tracinda and the Subscribing Public in exchange for a portion of
the shareholders' MGM stock. If we were to agree with
respondent's recharacterization as a redemption, section 311(a)
would provide that no loss would be recognized on MGM's
distribution of UA shares in redemption of its own shares.
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