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distributed assets of 2618 was incorrect, and he alleges that the
liquidation distribution to petitioner consisted of the $40,011
of assets shown on the yearend balance sheet in Schedule L of
2618's 1989 return.12
On October 16, 2002, we issued an order directing the
parties to file supplemental briefs addressing the issue of
whether the cessation of business by 2618 and the assumption of
its business operation by JKP in November 1990 constituted, in
substance, a reorganization within the meaning of sections
368(a)(1)(D) (“D” reorganization) and/or 368(a)(1)(F)) (“F”
reorganization) rather than a taxable liquidation of 2618 subject
to section 331. In response, petitioner submitted a two-page
statement in which he essentially reiterates his original
position that he did not receive anything of value from 2618 when
its business operation terminated in November 1990. Respondent
filed a brief in which he states that, assuming the club’s assets
were either owned or leased (from petitioner) by 2618 and the
club was being operated by 2618 rather than by petitioner
“exclusively on his own behalf”, he will concede that the
transfer of the club’s operation from 2618 to JKP meets all of
the statutory requirements for a nondivisive “D” reorganization;
i.e., there was a transfer by a corporation of substantially all
12 A 1990 return was not filed by 2618, and the record is
devoid of any balance sheet or other financial record for 2618
subsequent to Dec. 31, 1989.
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