120 T.C. No. 3
UNITED STATES TAX COURT
MERRILL LYNCH & CO., INC. & SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18170-98. Filed January 15, 2003.
MP is the parent of an affiliated group (P) that
filed consolidated income tax returns for the taxable
years at issue.
1986 Transactions: In 1986, P decided to sell the
principal investments business of MLL, a second tier
subsidiary. Because P wanted to retain certain assets
of MLL, consisting of its lease advisory business and
certain other assets (the 1986 retained assets) within
the consolidated group while minimizing or eliminating
gain on the sale of MLL outside the consolidated group,
P adopted and implemented a plan consisting of the
following steps: (1) MLL distributed the 1986 retained
assets to its subsidiary, Merlease; (2) MLL then sold
Merlease cross-chain to a sister corporation (MLAM) in
a transaction that qualified as a sec. 304, I.R.C.,
deemed redemption; (3) MLL then distributed a dividend
of the gross sale proceeds to its parent, MLCR, a
wholly owned subsidiary of MP; (4) P then completed the
sale of MLL to a third party. Under the consolidated
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