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Holdings proportionate to the number of Empak shares each
contributed. Although by itself this may not be sufficient
evidence to meet the adequate and full consideration requirement,
two additional facts do support such a finding. We have
determined that the respective assets contributed by the members
were properly credited to the respective capital accounts of each
contributing member, and distributions from WCB Holdings required
a negative adjustment in the distributee member’s capital
account. Most importantly, we have found the presence of a
legitimate and significant nontax business reason for engaging in
this transaction.
Respondent nonetheless argues that decedent did not receive
adequate and full consideration since decedent contributed 86.31
percent of Empak’s outstanding stock without receiving a control
premium for his contribution. Decedent did not need to receive a
control premium because he retained effective control over Empak
after he contributed his Empak stock to WCB Holdings. True,
decedent was not the chief manager of WCB Holdings, but the
86.31-percent interest in the class A governance units he
received in the exchange provided him with the power to remove
the WCB Holdings chief manager and appoint himself as chief
manager, to take any action the chief manager himself could take,
and to approve any significant action the chief manager could
take, including selling more than $10,000 worth of any security
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