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A. Spinoff of Clinpath, Inc.
On October 5, 1993, petitioner formed Clinpath, Inc.
(Clinpath), an Oklahoma general business corporation. Pursuant
to a subscription agreement between petitioner and Clinpath,
dated October 6, 1993, petitioner agreed to purchase 14,399
shares of the common stock of Clinpath, representing 100 percent
of the issued shares of Clinpath.
On October 29, 1993, petitioner and its shareholders entered
into a reorganization agreement in which they agreed, among other
things, that: (1) Petitioner shall contribute all of its
clinical laboratory assets to Clinpath in exchange for 14,399
shares of Clinpath stock issued to petitioner; and (2) after the
exchange of petitioner’s clinical laboratory assets for Clinpath
stock, petitioner promptly shall distribute all of the Clinpath
stock to petitioner’s shareholders in proportion to their
ownership of stock in petitioner. Also, on October 29,
petitioner transferred the clinical laboratory assets, including
goodwill, to Clinpath, and Clinpath transferred 14,399 shares of
its common stock to petitioner. Petitioner’s adjusted basis in
the Clinpath stock it received equaled $105,015, its adjusted
basis in the clinical laboratory assets it transferred to
Clinpath in exchange for the stock.
On October 30, 1993, petitioner distributed 100 percent of
the Clinpath stock to petitioner’s shareholders in proportion to
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