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B in a transaction in which gain or loss was
recognized, the distribution failed to satisfy the
active business requirement of sec. 355(a)(1)(C) and
(b)(2)(D)(ii), I.R.C. The distribution resulted in
gain to A under sec. 311(b), I.R.C., taxable to P’s
under sec. 1366(a), I.R.C.
Robert J. Beckham, Donald W. Wallis, and Suzanne M. Judas,
for petitioners.
William R. McCants, for respondent.
HALPERN, Judge: These consolidated cases involve the
following determinations by respondent of deficiencies in
petitioners’ Federal income taxes for 1993:
Petitioner Deficiency
Douglas P. McLaulin, Jr. $97,244
Augustus H. King III 97,124
Alfred E. & Lynn B. Holland 97,244
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. Petitioners bear the burden of proof. See Rule
142(a).
After concessions, the only issue for decision is whether
the January 15, 1993, distribution by Ridge Pallets, Inc., a
Florida corporation (Ridge), of all of the outstanding stock of
Sunbelt Forest Products, Inc., also a Florida corporation
(Sunbelt), qualifies as a tax-free "spinoff" of Sunbelt to
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