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section 304, i.e., the cross-chain sale, and the later sale of ML
Leasing outside the consolidated group were two steps in a firm
and fixed plan to terminate ML Leasing’s actual and constructive
ownership of Merlease, the issuing corporation.
The principal, and most compelling, evidence on which we
rely is the formal presentation of the plan to Merrill Parent’s
board of directors, which took place on July 28, 1986, only 4
days after the cross-chain sale of Merlease. The formal
presentation included the distribution of a written summary and
slides illustrating the details of the plan to dispose of
petitioner’s proprietary lease business culminating in the sale
of ML Leasing. The written summary laid out each step of the
plan. Among the steps identified were (1) the cross-chain sale
of Merlease, which the summary acknowledged had already occurred,
(2) the distribution of a dividend by ML Leasing to ML Capital
Resources consisting of the cash received in the cross-chain sale
by ML Leasing from ML Asset Management and other assets, and (3)
the imminent sale of ML Leasing to Inspiration. The written
summary described the tax benefits of the plan, which were
predicated on an increase in Merrill Parent’s basis in ML Leasing
under the consolidated return regulations for the proceeds of the
cross-chain sale. The written summary confirmed that the plan
included the sale of ML Leasing and unequivocally identified
Inspiration as the purchaser.
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