Dover Corporation and Subsidiaries - Page 1

                                   122 T.C. No. 19                                    

                               UNITED STATES TAX COURT                                

                  DOVER CORPORATION AND SUBSIDIARIES, Petitioner v.                   
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 12821-00.            Filed May 5, 2004.                     

                    D and H, United Kingdom corporations, were                        
               controlled foreign corporations with respect to P.  H                  
               was a wholly owned subsidiary of D.  In 1997, D sold                   
               the stock of H to an unrelated third party.  In 1999, P                
               requested that H be granted an extension of time to                    
               retroactively elect to be treated as a “disregarded                    
               entity” pursuant to sec. 301.7701-3, Proced. & Admin.                  
               Regs., effective “immediately prior to” D’s sale of the                
               H stock.  R granted the requested extension of time on                 
               Mar. 31, 2000.  H’s retroactive disregarded entity                     
               election was filed on or about Oct. 10, 1999.  Pursuant                
               to that election, there was, for Federal tax purposes,                 
               a deemed sec. 332, I.R.C., liquidation of H followed                   
               immediately by D’s deemed sale of H’s assets, rather                   
               than a sale by D of the H stock.                                       
                    Held:  In light of R’s administrative guidance                    
               pertaining to the tax effects of a liquidation governed                
               by secs. 332 and 381, I.R.C., D’s deemed sale of H’s                   
               assets constitutes a sale of property used in D’s trade                
               or business within the meaning of sec. 1.954-                          

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