- 20 -
amended by the Senate.8 See H. Conf. Rept. 100-1104 (Vol. II),
at 145, 146 (1988), 1988-3 C.B. 473, 635-636. Given the fact
that none of petitioner’s shareholders owns the requisite
percentage of stock as set forth in the report of the House Ways
and Means Committee, we hold that petitioner does not qualify for
the exemption set forth in section 263A(h).9 We need not and do
not address whether petitioner was otherwise disqualified for
that exemption because, as asserted by respondent, its paper
products are utilitarian in nature.
Having concluded that petitioner is subject to the UNICAP
rules, we now turn to the remaining issue; i.e., the year in
which section 481 requires that petitioner account for its change
to the UNICAP rules. Petitioner argues that TRA section
803(d)(2) requires that it account for this change in its taxable
year ended June 30, 1988. In relevant part, that section
provides:
8 None of the Senate’s amendments are relevant for purposes
of our discussion.
9 Petitioner argues that the Court should apply a “facts and
circumstances test” to determine whether Ms. Spafford owns
“substantially all” of petitioner’s stock for purposes of sec.
263A(h). Petitioner notes that neither the text of sec. 263A nor
the regulations thereunder have ever mentioned the 95 percent
test referenced in the committee report and states that the
“House Committee Report to Public Law 100-246 * * * suggested
that a 95% interest would clearly satisfy the substantially all
test.” Suffice it to say that the 95-percent test referenced in
the committee report is more than a mere suggestion and that
petitioner fails the 95-percent test because none of its
shareholders owns the requisite percentage of stock.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011