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fund. We conclude that Colonial had abandoned its trucking
business well before the merger.13 Colonial’s most recent
business type activity was acquiring and holding tax-exempt bonds
and a municipal bond fund. This was Colonial’s historic business
at the time of the merger for purposes of determining whether
there was a continuity of business enterprise. See, e.g., Abegg
v. Commissioner, 50 T.C. 145 (1968), affd. 429 F.2d 1209 (2d Cir.
1970).14
As of October 31, 1993, 2 months prior to the merger,
Colonial held approximately $7.35 million in tax-exempt bonds and
a municipal bond fund and approximately $1,500 in cash. On
December 31, 1993, Colonial liquidated one of those bonds and its
municipal bond fund for more than $2,550,000. As a result,
Colonial’s cash position increased significantly.
The fair market value of the tax-exempt bonds held directly
13We also note: (1) The type of trucking business conducted
by Central involving hauling solid and liquid (and sometimes
toxic) chemicals in expensive tanker trailers was different from
the operations previously conducted by Colonial; (2) Central
never operated as a packaged-freight carrier; and (3) Central
never used the ICC operating authority acquired from Colonial in
the merger.
14We recognize that investment activity is not a trade or
business for some purposes. See Commissioner v. Groetzinger, 480
U.S. 23 (1987). However, investment activity has been recognized
as a historic business for purposes of the continuity of business
enterprise doctrine. See Abegg v. Commissioner, 50 T.C. 145
(1968), affd. 429 F.2d 1209 (2d Cir. 1970); see also T.D. 7745,
1981-1 C.B. 134, 139 (Investment operations may constitute a
historic business if the investment assets were not acquired as
part of a plan of reorganization).
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