- 25 -
Issue 2. Independent Producer Issue9
Background
Pursuant to the 1982 reorganization, Old Petroleum
contributed all of the assets of its hydrocarbons division to
Products, including all of the stock of Texgas. In exchange, Old
Petroleum received the stock of Products, which it then
distributed to Holdings, the parent company of Products and Old
Petroleum. Thereafter, Products owned 100 percent of the stock
of Texgas, a retailer of propane,10 and Old Petroleum no longer
owned stock in Products or Texgas. In the December 31, 1984,
reorganization, Old Petroleum transferred all of its domestic oil
and gas properties to New Petroleum, which was also a subsidiary
of Holdings. Petroleum, Products, and Texgas were related
persons within the meaning of section 613A(d)(3).
Petroleum was in the oil and gas exploration and production
business. Products was in the business of processing and
marketing oil and natural gas and their derivatives, including
propane, for Petroleum as well as for unrelated oil and gas
producers.
8(...continued)
the written instrument to conform to the agreement and intent of
the parties. See Woods v. Commissioner, 92 T.C. 776, 789 (1989).
9 When references in this opinion apply to both Old Petroleum
and New Petroleum, the term "Petroleum" is used.
10 Propane is a product derived from natural gas under sec.
1.613A-7(r)(3), Income Tax Regs. Accordingly, references herein
to natural gas include propane.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011