- 78 -
a transaction. The tax consequences which arise from
gains from a sale of property are not finally to be
determined solely by the means employed to transfer
legal title. Rather, the transaction must be viewed as
a whole, and each step, from the commencement of nego-
tiations to the consummation of the sale, is relevant.
A sale by one person cannot be transformed for tax
purposes into a sale by another by using the latter as
a conduit through which to pass title. To permit the
true nature of a transaction to be disguised by mere
formalisms, which exist solely to alter tax liabili-
ties, would seriously impair the effective administra-
tion of the tax policies of Congress. [Id. at 334; fn.
ref. omitted.]
The majority appears to be applying Court Holding Co. principles
to determine that, in substance, Ms. Read sold the shares to Mr.
Read although, on his behalf, she transferred them to MMP. That
is an inappropriate analysis in the bootstrap acquisition area,
where there is no practical difference between the two ways of
accomplishing the bootstrap acquisition and the only relevant
distinction is form, which is manifest by legal rights and
duties. See the discussion by professors Bittker and Lokken at
3 Bittker & Lokken, Federal Taxation of Income, Estates, & Gifts,
par. 93.1.5, at 93-19 (2d ed. 1991).
IV. Conclusion
Since I believe that Ms. Read has failed to prove that the
transfer was to Mr. Read, I would hold section 1041(a) inapplica-
ble and hold that she recognized gain on the transfer. Mr. Read,
of course, had no item of gross income on account of the trans-
fer.
WELLS and BEGHE, JJ., agree with this dissent.
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