Coggin Automotive Corporation - Page 19

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               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 otherwise                  

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