Merrill Lynch & Co., Inc. & Subsidiaries - Page 80




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          therefore, that a firm and fixed plan to dispose of ML Capital              
          Resources outside the consolidated group existed on the date of             
          the Vessel Leasing cross-chain sale and that the Vessel Leasing             
          cross-chain sale, like the other 1987 cross-chain sales, was an             
          integrated step in that plan.                                               
               Because the eight 1987 cross-chain sales (the deemed section           
          304 redemptions), when integrated with the sale of ML Capital               
          Resources’ stock, resulted in the complete termination of ML                
          Capital Resources’ actual and constructive ownership interest in            
          the issuing corporations, see sec. 304(b), we hold that the                 
          redemptions qualified under section 302(b)(3) and that,                     
          therefore, the redemptions shall be treated as a payment in                 
          exchange for the stock under section 302(a) and not as a dividend           
          under section 301.                                                          
          IV.  Conclusion                                                             
               The record establishes that on the dates of the cross-chain            
          sales, petitioner had agreed upon, and had begun to implement, a            
          firm and fixed plan to completely terminate the target                      
          corporations’ ownership interests in the issuing corporations               
          (the subsidiaries whose stock was sold cross-chain).  The plan              
          was carefully structured to achieve very favorable tax basis                
          adjustments resulting from the interplay of section 304 and the             
          consolidated return regulations, and the steps of the plan were             
          described in detail in written summaries prepared for meetings of           






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