Textron Inc. and Subsidiary Companies - Page 1

                                   117 T.C. No. 7                                     

                               UNITED STATES TAX COURT                                

               TEXTRON INC. AND SUBSIDIARY COMPANIES, Petitioner v.                   
               COMMISSIONER OF INTERNAL REVENUE, Respondent                           

               Docket No. 20643-98.                  Filed August 21, 2001.           

                    P, a domestic corporation, acquired substantially                 
               all of the stock of A, a foreign corporation.  The                     
               Federal Trade Commission (FTC) contemporaneously filed                 
               a complaint in U.S. District Court seeking to enjoin                   
               P’s acquisition and control of A pending resolution of                 
               potential restraint of trade issues.  Pursuant to the                  
               court’s order, P transferred its A stock to a voting                   
               trust pending the FTC’s consideration of the issues.                   
               The trust had an independent trustee who held and voted                
               the stock without influence by P.  The trustee was                     
               directed to, and did, operate A independently of P and                 
               as an active competitor of P.  P was the trust’s only                  
                    Held:  Sec. 951(a), I.R.C., does not include A’s                  
               subpt. F income in P’s income because P did not own the                
               A shares after the transfer.                                           
                    Held, further, sec. 951(a), I.R.C., includes A’s                  
               subpt. F income in the trust’s income which, under                     
               secs. 671 and 677(a), I.R.C., must be recognized by P.                 

Page:   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