- 68 -
of the cross-chain sale, Inspiration had not yet completed its
due diligence, contractually committed itself to buy the stock of
ML Leasing, or finalized its financing arrangements. Moreover,
on the date of the cross-chain sale, the board of directors of
Merrill Parent had not yet authorized the sale of ML Leasing’s
stock, and Inspiration had not yet approved the purchase. The
existence of these uncertainties according to petitioner
precludes any finding that the cross-chain sale was part of a
firm and fixed plan to terminate ML Leasing’s actual and
constructive ownership of Merlease. We disagree.
Whether a redemption and later sale are integrated steps in
a firm and fixed plan is a factual determination that necessarily
focuses on the actions of the redeemed shareholder and the
redeeming corporation. See Roebling v. Commissioner, supra;
Niedermeyer v. Commissioner, 62 T.C. 280 (1974). If the actions
of the redeemed shareholder and the redeeming corporation
evidence a firm and fixed plan to participate in two or more
related transactions that, individually or collectively, qualify
as a redemption under section 302(b), then the redemption
executed pursuant to the plan will qualify as a sale or exchange
under section 302(a). Niedermeyer v. Commissioner, supra.
After examining the actions of the redeemed shareholder (ML
Leasing), the redeeming corporation (ML Asset Management), and
Merrill Parent, we are convinced that the deemed redemption under
Page: Previous 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 NextLast modified: May 25, 2011