Merrill Lynch & Co., Inc. & Subsidiaries - Page 44




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          redemption in complete termination of a shareholder’s interest              
          (section 302(b)(3)), or a redemption from a noncorporate                    
          shareholder in partial liquidation (section 302(b)(4)).  If the             
          deemed redemption does not qualify under section 302(b), then the           
          distribution is governed by section 301.32                                  
               In this case, respondent relies only upon section 302(b)(3),           
          claiming that the deemed section 304 redemptions, when integrated           
          with the sales of the target corporations, completely terminated            
          the target corporations’ ownership of the issuing corporations.             
          Section 302(b)(3) provides that “Subsection(a) shall apply if the           
          redemption is in complete redemption of all of the stock of the             
          corporation owned by the shareholder.”  See Bleily & Collishaw,             
          Inc. v. Commissioner, 72 T.C. 751, 756 (1979), affd. without                
          published opinion 647 F.2d 169 (9th Cir. 1981).  The attribution            
          rules under section 318(a) apply in determining ownership of                
          stock for purposes of section 302.  See sec. 302(c)(1).                     
          II.  The Parties’ Arguments Regarding the Applicable Legal                  
               Standard                                                               
               Ordinarily, whether a redemption results in the complete               
          termination of a shareholder’s interest in a corporation under              
          section 302 is determined immediately after the redemption.  Sec.           



               32Sec. 301(a) provides:  “Except as otherwise provided in              
          this chapter, a distribution of property (as defined in section             
          317(a)) made by a corporation to a shareholder with respect to              
          its stock shall be treated in the manner provided in subsection             
          (c).”                                                                       





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