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of its assets to another corporation controlled by the sole
shareholder of both corporations in exchange for stock of the
transferee corporation followed by a distribution of the
transferee stock to such shareholder, all pursuant to a plan of
reorganization. Secs. 368(a)(1)(D), (c), 354(b)(1)(A) and (B).13
Respondent also appears to concede that the transfer of the
club’s operation from 2618 to JKP meets the statutory
requirements for an “F” reorganization: “a mere change in
identity, form, or place of organization of one corporation,
however effected”, which respondent acknowledges may encompass a
new corporation’s mere acquisition of the assets of the old
corporation, H. Conf. Rept. 97-760, 1982-2 C.B. 600, 634-635.
Respondent argues, however, that, because JKP sold the club
within 3 months of taking over its operation, the transaction may
have failed to meet the nonstatutory requirement of continuity of
business enterprise (COBE), applicable to any reorganization
described in section 368(a) and firmly embedded in the
regulations under section 368. See sec. 1.368-1(d), Income Tax
13 Because petitioner already owned the stock of JKP there
was no need for an actual exchange of 2618's assets for JKP stock
followed by a distribution of the stock to petitioner. As
respondent acknowledges, “[t]he law is well settled that where
shareholders of the transferor corporation already own all of the
stock of the transferee corporation, the issuance of further
stock for exchange and distribution is not required.” See
DeGroff v. Commissioner, 54 T.C. 59, 71 n.7 (1970), affd. per
curiam 444 F.2d 1385 (10th Cir. 1971), and the cases cited
therein.
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