Gary D. and Lindy H. Combrink - Page 10




                                       - 10 -                                         
          Regarding the control element, section 304(c)(1) specifies that             
          “control means the ownership of stock possessing at least 50                
          percent of the total combined voting power of all classes of                
          stock entitled to vote, or at least 50 percent of the total value           
          of shares of all classes of stock.”  Section 304(c)(3)(A) further           
          clarifies that “Section 318(a) (relating to constructive                    
          ownership of stock) shall apply for purposes of determining                 
          control under this section”.  As a result, indirect ownership               
          through family members and related entities is taken into account           
          in ascertaining control.  See sec. 318(a).  A person who owns at            
          least 5 percent of a corporation’s stock, for example, is                   
          considered as owning a proportionate amount of any shares held by           
          that corporation.  See sec. 304(c)(3)(B)(i); sec. 318(a)(2)(C).             
               Property is defined for purposes of sections 301 through 318           
          as “money, securities, and any other property; except that such             
          term does not include stock in the corporation making the                   
          distribution (or rights to acquire such stock).”  Sec. 317(a);              
          cf. Bhada v. Commissioner, 89 T.C. 959, 963-964 (1987), affd. 892           
          F.2d 39 (6th Cir. 1989), affd. sub nom. Caamano v. Commissioner,            
          879 F.2d 156 (5th Cir. 1989).                                               
               Given the foregoing requirements and definitions, we are               
          satisfied that Mr. Combrink’s exchange of LINKS stock for debt              
          release is a transaction of the type described in section                   
          304(a)(1).  With respect to control, Mr. Combrink directly owned            






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011