Rhone Poulenc Surfactants and Specialties, L.P. - Page 6




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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.           
                                                             (continued...)           





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