- 40 -
decedent's Johnco stock would be a large timber products company
or pension fund.
While it may still be possible after the repeal of the
General Utilities doctrine to avoid recognition of built-in
capital gains, respondent has failed to convince us that any
viable options for avoidance would exist for a hypothetical buyer
of decedent's Johnco stock. The tax strategies suggested by Mr.
Burns, who is not an expert in taxation, can at best defer the
recognition of built-in capital gains, but only by deferring
income and ultimately cash-flow, and suggest the work of an
advocate rather than a disinterested expert witness.24 Perhaps
anticipating that the avoidance strategies offered by his expert
do not withstand scrutiny, respondent argues on brief that
petitioner could "hire some creative and resourceful tax
practitioner" and since "someone might think of a way to avoid
the tax effect of an immediate liquidation", the tax on built-in
capital gains is only speculative. Contrary to respondent, we do
not think Mr. Burns has demonstrated any real possibilities for
avoidance of the built-in capital gains tax by Johnco, let alone
24 We note also that in suggesting the availability of an S
corporation election as a means of avoiding the tax on built-in
capital gains, respondent and his expert overlook clear obstacles
to that approach. Electing S corporation status would require
the consent of all shareholders; thus Andrew could thwart that
approach. Also, the shareholders of an S corporation must
generally be individuals, whereas experts of both parties
conclude that the likely buyer of decedent's Johnco stock would
be a large timber products company or a pension fund. Finally,
respondent and his expert fail to consider the impact that sec.
1374 might have on any decision to convert Johnco from C to S
corporation status.
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