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tional obligation to purchase the shares. The majority holds
that such an inquiry is inappropriate. I disagree. I further
disagree with what seems to me to be the majority’s evocation of
the principles of Commissioner v. Court Holding Co., 324 U.S. 331
(1945), to determine whether Ms. Read sold the shares to Mr.
Read.
II. Bootstrap Acquisitions
Mr. Read acquired virtually complete ownership of MMP
without expending any of his own funds. He did so by arranging
for MMP to redeem the shares. Such an acquisition, where the
acquirer uses funds of the corporation to aid in his acquisition
of control, is sometimes referred to as a “bootstrap acquisi-
tion”. A part owner of a corporation can use the corporation’s
funds to acquire complete ownership of the corporation in one of
two ways. One, he can arrange for the corporation to purchase
the seller’s shares. Two, he can purchase the seller’s shares
and cause the corporation to redeem those shares from him. There
is no practical difference between those alternatives. In both
cases, the seller receives the same amount, and the remaining
owner (sometimes, the buyer) becomes the sole owner of the
corporation, whose assets are reduced by the same amount. It is
well settled, however, that the difference in form between those
alternatives may result in different income tax consequences (at
least for the buyer). As professors Bittker and Lokken put it:
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