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Awareness, Investigation, and Discussion of Tri-Power's
NOL's
Respondent first argues that petitioner's awareness,
investigation, and discussion of Tri-Power's NOL's supports a
finding that section 269 applies. It is uncontroverted that (1)
petitioner knew that Tri-Power had NOL's in excess of $84
million, (2) petitioner engaged Arthur Andersen to conduct an
extensive investigation of Tri-Power's prior tax returns, its
NOL's, and their potential use by petitioner, and (3)
petitioner's management and board discussed Tri-Power's NOL's.
"It is clear, however, that consideration of the tax aspects of a
transaction does not mandatorily require application of section
269 and that such consideration is only prudent business
planning." D'Arcy-MacManus & Masius, Inc. v. Commissioner, 63
T.C. at 451; see also Brumley-Donaldson Co. v. Commissioner, 443
F.2d 501, 510 (9th Cir. 1971) (Trask, J., dissenting) ("In the
complexity of today's business and tax jungle a corporate
president who does not obtain tax advice before an acquisition,
or merger or substantial dollar transaction ought to be fired."),
affg. T.C. Memo. 1969-183; VGS Corp. v. Commissioner, 68 T.C.
563, 596 (1977) ("Complicated business transactions do not take
place in a vacuum and we find this to be nothing more than
prudent business planning."). We believe that petitioner's
consideration of Tri-Power's prior Federal income tax returns and
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