- 22 -
neither side showed that either of the elder Hursts had any con-
tinuing involvement in whatever business RHI had left. (Indeed,
the trial left unclear what, if anything, was left of RHI by the
time HMI bought it.)
Relying on section 302 alone to upset the Hursts’ character-
ization of their RHI stock sale under these circumstances seemed
mistaken for another reason: That section governs stock redemp-
tions, and the RHI stock was sold to HMI, not redeemed by RHI.
As already noted, the trial focused almost entirely on HMI, and
the Hursts’ continuing connection to it. Both parties seemed to
assume that if the Hursts won the battle for treating the redemp-
tion of their HMI stock as a sale, they would win as well on RHI.
Now the Commissioner urges us to rely on a different section
of the Code--section 304–-to support his position on RHI. This
section is a more promising ground for him, because it allows him
to treat some stock sales to related corporations as redemptions
under section 302. The problem, however, is that he raised
section 304 for the first time only in his answering brief. The
Hursts object to the introduction of an issue so late in the
proceedings, invoking Aero Rental v. Commissioner, 64 T.C. 331
(1975), and Theatre Concessions v. Commissioner, 29 T.C. 754
(1958). Aero Rental and Theatre Concessions are part of a line
of cases beginning at least with Nash v. Commissioner, 31 T.C.
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011