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taxpayer intended to sell its shares whenever the money needed to
fund the acquisitions became available.
In Bleily & Collishaw, Inc., the issue before the Court was
whether the redemptions met the requirements of section 302(b)(3)
of the Internal Revenue Code of 1954. We described the
applicable legal standard as follows:
Where several redemptions have been executed pursuant
to a plan to terminate a shareholder’s interest, the
individual redemptions constitute, in substance, the
component parts of a single sale or exchange of the
entire stock interest. We have refused, however, to
treat a series of redemptions as a single plan unless
the redemptions are pursuant to a firm and fixed plan
to eliminate the stockholder from the corporation.
Generally, a gentleman’s agreement lacking written
embodiment, communication, and contractual obligations
will not suffice to show a fixed and firm plan. On the
other hand, a plan need not be in writing, absolutely
binding, or communicated to others to be fixed and firm
although these factors all tend to indicate that such
is the case. [Id. at 756; citations omitted.]
Noting that whether a firm and fixed plan existed in a given case
is necessarily a fact issue, we held that the requirements of
section 302(b)(3) were met because the redemptions were part of a
firm and fixed plan to eliminate the stockholder from the
corporation. The record established that the corporation planned
to eliminate the taxpayer as a shareholder and that the taxpayer
had agreed to the sale of all its shares and to the purchase
price, even though there was no binding obligation on either
party to consummate additional stock sales.
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