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issue was to secure the benefit of Tri-Power's NOL's. To the
contrary, after careful scrutiny of all the facts and
circumstances surrounding the transactions in issue, we conclude,
as discussed supra, that business considerations were the
principal purpose for the acquisition and dropdown.
Postacquisition Pursuit of the Acquired Properties
Respondent argues that, after the acquisition, petitioner
did not vigorously exploit the Tri-Power properties. We
disagree. Although petitioner ultimately sold or abandoned many
of the Tri-Power properties, we believe that petitioner's pursuit
of the Tri-Power properties is wholly consistent with its
contention that obtaining the reserves was the primary purpose
for the acquisition.
The Tri-Power NOL's Distort Petitioner's Tax Liability
Respondent contends that the acquisition and dropdown are
precisely the type of abusive transactions that section 269 was
designed to attack because the NOL's in issue distort
petitioner's tax liability. The purpose of section 269 is to
render ineffective "arrangements distorting or perverting
deductions, credits, or allowances so that they no longer bear a
reasonable business relationship to the interests or enterprises
which produced them and for the benefit of which they were
provided." S. Rept. 627, supra, 1944 C.B. at 1016. Section
1.269-2(b), Income Tax Regs., indicates that section 269 applies
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