- 17 -
Respondent justifies the proposed recharacterization on the
ground that the form adopted by the parties "does not comport
with economic reality". Respondent's argument in its purest
terms is that sale of all the issued shares in MGM to the TBS
Group and MGM's sale of all the issued shares in UA to Tracinda
cannot be viewed as occurring simultaneously for tax purposes.
Respondent contends the transactions must be assigned a
sequential order for tax purposes. Respondent further argues
that since simultaneous sale transactions cannot be recognized
for tax purposes, it is necessary to recharacterize the
transaction to reflect its true substance.
We find respondent's argument that the sales could not occur
simultaneously for tax purposes to be no more than superficially
appealing, unsupported by authority, and without merit in view of
the stipulated facts. On brief, respondent cites no authority
for the proposition that "some kind of [sequential] ordering of
the steps of the transaction is necessary for tax purposes to
determine the tax consequences." Transactions that occur
simultaneously or are deemed by law to have occurred concurrently
or simultaneously are commonplace.13 In G.M. Trading Corp. v.
13The regulations speak of simultaneous events in at least
22 places. For instance, sec. 1.351-1(a)(1), Income Tax Regs.,
provides:
"immediately after the exchange" does not necessarily
require simultaneous exchanges by two or more persons,
(continued...)
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011