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The only potentially relevant change that occurred on
January 1, 1984, was the introduction of the Shippers Interest
contract between petitioner and NUF and the Facultative
Reinsurance Agreement between NUF and OPL. Petitioner attempts
to justify this arrangement on the ground that it was based on
bona fide business considerations and that the arrangement had
economic substance. If on the other hand the arrangement with
NUF and OPL had neither business purpose nor economic substance,
other than tax avoidance, the entire arrangement has all the
earmarks of a classic assignment of income wherein petitioner was
attempting to assign EVC income that had been earned through its
own services and activities to OPL for the benefit of
petitioner's and OPL's common shareholders.
On brief, petitioner relies on Moline Properties, Inc. v.
Commissioner, 319 U.S. 436 (1943), for the proposition that it
may rearrange, change, and divide business activities among
business entities. We agree that, normally, a choice to transact
business in corporate form will be recognized for tax purposes as
long as there is a business purpose or the corporation engages in
business activity. See Northern Ind. Pub. Serv. Co. v.
Commissioner, 105 T.C. 341, 347-348 (1995) (citing Moline
Properties, Inc. v. Commissioner, supra at 438-439), affd. 115
F.3d 506 (7th Cir. 1997). As previously noted, OPL's separate
corporate existence is not being questioned. The issue then is
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