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(1) The general partner was Autochthon Administration, Inc.
--($10); and
(2) the limited partners were the Penobscot Nation-($989);
and Autochthon Investment, Inc.--($1). The president of
Autochthon Administration, Inc., was an associate of Mallin.
OPINION
IRA contends that it and the TG limited partnership's
transfer of assets to Decision Holdings qualifies for
nonrecognition treatment under section 351. IRA claims that the
cost or basis of the interests transferred by TG to Decision
Holdings as of December 1, 1988, was $1,091,641. Thus, it is
asserted that Decision Holdings, under section 362, had a
carryover of TG's basis in the assets the limited partnership
transferred to it, so that Decision Holdings realized a
$1,073,835 loss on the sale of those assets to Autochthon. IRA
further maintains that (1) respondent's argument that section 351
is inapplicable to the transaction was not raised in the notice
of deficiency, and such issue is not properly before the Court;
(2) there was a business purpose for the transaction; and (3)
Decision Holdings' basis in the assets it subsequently sold was
substantiated.
Respondent contends that IRA engaged in the purported
section 351 transaction for tax avoidance purposes in order to
enable it to claim a loss in excess of $1 million from Decision
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