- 19 - Respondent, relying on Frank Lyon Co. v. United States, 435 U.S. 561, 583-584 (1978), takes the position that the 1993 restructuring “was not imbued with tax-independent considerations, but was instead shaped solely by tax-avoidance features that have meaningless labels attached.” In this regard, respondent posits: “The 1993 restructuring was conceived and executed for the principal purpose of permanently escaping corporate level taxes on the LIFO reserves built into the LIFO inventories of petitioner’s former consolidated subsidiaries.” Petitioner disputes respondent’s assertion, maintaining that the 1993 restructuring occurred in order to achieve tax-independent economic and/or business desires of both Mr. Coggin and the general managers. We agree with petitioner. The record reveals: (1) General managers were vital to the successful operation of the automobile dealerships; (2) providing incentives to attract and retain quality general managers was essential in the success of the automobile dealerships; (3) operating the automobile dealerships in stand-alone partnership form afforded the general managers flexibility greater than that offered by operating the dealerships in corporate form; and (4) Mr. Coggin and the general managers never discussed recapture of the LIFO reserves. It is axiomatic that (1) tax considerations may play a legitimate role in shaping a business transaction, and (2) tax planning does not necessarily transform an event otherwisePage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011