- 98 -
vertically integrate its petroleum production business.
The fact that Seaway was a common carrier under Federal
law, and that there is no evidence that petitioner ever
received crude oil from Mex-Am, does not convert
petitioner’s interests in those entities to mere passive
investments. Each corporation was organized to perform
functions that were related to petitioner’s petroleum
business.
Petitioner’s holding of the stock of each corporation
was directly related to petitioner’s petroleum business.
Petitioner disposed of its interests in Seaway and Mex-Am
because changes in the crude oil market made those
interests unnecessary. As with the sale of Terra stock,
the losses realized are from transactions that are directly
related to petitioner’s petroleum business. As such, we
find that the losses realized are from patronage sources.
Gains From the Sale of Section 1231 Assets
During the years in issue, petitioner disposed of
three groups of assets which are described in section
1231(b) as “property used in the trade or business”.
These include the Lamont gas plant, the soybean processing
facilities, and the miscellaneous section 1231 assets.
Collectively, we refer to these assets as the section 1231
assets.
Page: Previous 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 NextLast modified: May 25, 2011