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finally came into existence and property interests changed hands
by virtue of the purchase agreements and the assignment and
delegation agreements, the transfer occurred between petitioner,
as seller, and the subsidiary, as buyer.
The next argument of respondent is that, even if the
subsidiary received contractual rights to purchase nonexisting
property in the future from the third-party customers followed by
receipt of property interests in the telephone systems from
petitioner, the transaction was not an intercompany transaction.
Essentially, respondent contends that the transactions were
three-party transactions in which the subsidiary received its
rights through the third-party customers, and, thus, not all
parties of the transaction were members of one consolidated
group.
Section 1.1502-13(a)(1)(i), Income Tax Regs., states that
“an intercompany transaction would include a sale of property by
one member of a group * * * to another member of the same group.”
(Emphasis added.) Thus, in determining whether a sale occurred
between members of the same consolidated group, we look at the
participants to the sale of the property. As already set forth
above, under the State law governing these transactions, a
transfer of a contractual right to purchase nonexisting property
in the future is not a part of the sale of the underlying
contractual property. The parties to the sale, which occurred
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