Textron Inc. and Subsidiary Companies - Page 13

                                       - 13 -                                         
          restore deferred gains and losses if the members of the                     
          terminating group become members of another group).  The subject            
          loss, therefore, would have continued to be deferred in the year            
          in which petitioner now claims it is deductible.                            
               Petitioner seeks a result different from a cash redemption             
          relying on the mere fact that AVCO redeemed the stock for a note            
          rather than cash.  We do not believe that this distinction in               
          fact leads to a different result.  Petitioner offers no                     
          explanation why the consolidated return regulations would give              
          effect to gains and losses realized in intercompany redemptions             
          paid for with debt but not those realized in intercompany                   
          redemptions paid for by cash or other property.  In fact, we                
          understand petitioner to concede that Paul Revere’s status as a             
          member of the Textron group at the time the loss was realized on            
          the note redemption satisfies the membership requirement of                 
          section 1.1502-14(d)(4)(i)(a), Income Tax Regs. (“A member                  
          received an obligation of another member in exchange for                    
          property”), even though Paul Revere was not a member of the                 
          Textron group at the time it received the AVCO note in exchange             
          for the AVCO stock.  We conclude that Paul Revere is a member for           
          purposes of section 1.1502-14(d)(4)(i)(c), Income Tax Regs., and            
          that the AVCO note was never held by a nonmember.                           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011