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Mr. Read, Ms. Read, and one other individual constituted the
board of directors of MMP (the board). By unanimous written
consent, the board consented to MMP’s purchase of the shares.
Subsequently, Ms. Read and MMP entered into a stock purchase
agreement, and, pursuant thereto, MMP acquired the shares from
her.
Since Mr. Read had the right to assign his obligation to
purchase the shares, I do not believe that his obligation to
purchase the shares was primary and unconditional. The facts
here are similar to the facts in S. K. Ames, Inc. v. Commis-
sioner, supra; Buchholz Mortuaries, Inc. v. Commissioner, supra;
and Bunney v. Commissioner, supra. Therefore, I would find that
the transfer was to MMP, and not to (or on behalf of) Mr. Read.
The majority finds that the transfer did not satisfy any
liability or obligation of Mr. Read’s. Nevertheless, the major-
ity finds that Ms. Read was, in effect, acting as Mr. Read’s
agent in transferring the shares to MMP. Majority op. pp. 36-38.
Without citing any authority, the majority appears to be relying
on the principles of Commissioner v. Court Holding Co., 324 U.S.
331 (1945), where a corporation was taxed on gain on a sale by
shareholders of property distributed by the corporation because
the corporation went so far toward the sale before the distribu-
tion that the sale was in substance made by the corporation.
In Court Holding Co., the Supreme Court said:
The incidence of taxation depends upon the substance of
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