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Tri-Power's reserves. Moreover, we find nothing to suggest that
petitioner disregarded the 1986 updated production data. To the
contrary, we believe that petitioner considered all of the
available information in making its decision to acquire Tri-
Power.
Letters of Intent
Respondent next argues that petitioner's letters of intent
indicate that tax considerations predominated in the acquisition.
Petitioner, in its October 22, 1986, letter of intent,
conditioned the acquisition on, inter alia, the receipt of a
favorable opinion from its tax adviser. The condition states as
follows:
Plains will not consummate the transaction contemplated
hereby until it receives an opinion letter from its tax
advisor * * * stating the Plains' tax advisor has reviewed
all tax information relating to the business of Tri-Power
and Tri-Power's predecessors, that the tax returns and data
supporting those returns are accurate, complete and
verifiable as such and that in such advisor's opinion
Plains' acquisition of Tri-Power as provided for in the
definitive Agreement should achieve the tax consequences
intended by the parties thereto.
Respondent contends that the above-quoted provision
demonstrates that petitioner would not have consummated the
acquisition unless petitioner had some assurance that it would be
able to use Tri-Power's NOL's. Respondent argues that this fact
alone demonstrates that tax avoidance was the primary purpose for
the acquisition. We do not agree. The letter of intent merely
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