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impact on the agreed upon sales price of the assets. The Asset
Purchase Agreement did not provide for an adjustment or revision
of the purchase price at the end of the restricted period. As
such, the first transaction terminated when the assets were
sold, and the subsequent sale of the Read-Rite stock was a new
transaction that should be considered entirely separate and
independent for tax purposes. Accordingly, the facts of this
case provide no basis for applying the relation-back doctrine of
Arrowsmith v. Commissioner, supra.
Petitioner makes several contrary arguments. First,
petitioner contends that the lockup agreement and restrictions
on the Read-Rite shares were the integral links tying Conner
Malaysia’s sale of the Read-Rite shares to its receipt of the
shares in exchange for the assets. According to petitioner,
both the receipt of the Read-Rite shares and the sale
restrictions imposed on Conner Malaysia by Read-Rite and its
underwriters was an integral part of Conner Malaysia’s sale of
the assets. Thus, petitioner argues that the sale of the Read-
Rite shares upon lapse of the sale restrictions arose out of and
was part and parcel of the same transaction.
The fact that restricted stock was used as consideration
for the asset sale does not integrally tie the two transactions
together. Regardless of when Conner Malaysia could sell the
Read-Rite shares, the subsequent sale of those shares did not
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