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sophisticated and would have understood that the tax benefit to
one party might result in an adverse tax effect to the other
party.11 We cannot conclude that the parties contemplated or
intended the lawsuit be received by petitioners from Norway as
part of the purchase price for their stock.
Petitioners argue that where “simultaneous mutually binding
interdependent transactions result in the termination of a
shareholder’s stock interest in a corporation”, the transactions
should be integrated, citing In re Steen, 509 F.2d 1398 (9th Cir.
1975); Casner v. Commissioner, 450 F.2d 379 (5th Cir. 1971),
affg. in part, revg. in part and remanding T.C. Memo. 1969-98;
Smith v. Commissioner, 82 T.C. 705 (1984); and Roth v.
Commissioner, T.C. Memo. 1983-651. On the basis of those cases,
petitioners argue that the lawsuit was received in substance as
part of the sale of the BFI stock to Norway. The import of the
cases petitioners cite is that on the specific facts presented it
11In Casner v. Commissioner, 450 F.2d 379, 398 (5th Cir.
1971), affg. in part, revg. in part and remanding T.C. Memo.
1969-98, the Court of Appeals for the Fifth Circuit observed:
In the instant case, both the selling stockholders
and the buying stockholders have denied tax liability
for the cash distributions * * * made to the selling
stockholders. However, this Court recognizes that the
selling stockholders and the buying stockholders cannot
so manipulate their transactions or so frame their
transactions as to result in the dividend disappearing
with no one taxable for the receipt of the cash
dividends or cash distributions. Under the statute,
the cash dividends or cash distributions are inexorably
someone’s income.
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