- 49 -
on Zenz, claiming that “its relevance to this case is at best
tangential.” Petitioner notes that Zenz involved both a tax year
prior to the enactment of section 302 and a different factual
situation. In Zenz, the sole shareholder of a corporation sold
some of her stock first, and a short time later, the issuing
corporation redeemed the remainder of her stock. Petitioner
distinguishes Zenz from the instant case because “The order of
sale and subsequent redemption was chosen to reduce taxes--that
is, to avoid dividend treatment from the redemption leg”, the
redemption completely terminated the taxpayer’s interest in the
corporation, and the Commissioner was attempting to reorder the
transactions in order to obtain dividend treatment for the
redemption proceeds. Petitioner urges this Court to limit the
application of the Zenz intent-based test to cases where the form
of the transactions and the intent of the taxpayer coincide as it
did in Zenz and to decline to apply the test in cases such as
this where the issue to be decided is “whether a redemption that
does not terminate the shareholder’s interest and a later sale
that does terminate that interest are sufficiently related to
justify treating a non-terminating redemption as part of the
later sale transaction.”
33(...continued)
three tests because the applicable legal standard is that
identified elsewhere in this Opinion.
Page: Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 NextLast modified: May 25, 2011