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Petitioner is a subsidiary of GAF Corporation, a Delaware
corporation (GAF). The transfer was made by petitioner and
another subsidiary of GAF, and the property in question consists
of assets related to businesses carried on by those two
subsidiaries.7 The partnership characterized the transfer as a
contribution of property to the partnership in exchange for an
interest in the partnership. Respondent’s challenge is based on
his conclusion that the transfer constituted a sale and not a
contribution of the property to the partnership. Respondent
reaches that conclusion based on two sometimes independent
hypotheses: (1) There was no partnership, and (2) the transferor
of the property received no partnership interest in exchange
therefor.8 The parties are in agreement that this case involves
one or more partnership items.9
7For simplicity, when discussing the transfer, we use the
term “petitioner”, without distinction, to refer to petitioner,
its parent (GAF corporation), and its sister subsidiary.
8For example, respondent claims, in the alternative: (1)
There was no partnership, (2) if there were a partnership, the
transfer was not to it but to a related party, and (3) if there
were a partnership and the transfer were to it, the transfer was
not in exchange for an interest in the partnership but, rather,
was a sale to the partnership.
9Sec. 301.6231(a)(3)-1(a)(4), Proced. & Admin. Regs.,
provides that the term “partnership item” includes “contributions
to the partnership”. The fact that the partnership might be
determined to be a sham in proceedings under the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, 96
Stat. 324, does not preclude the applicability of the TEFRA
provisions. See sec. 6233; Oceanic Leasing v. Commissioner, T.C.
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