-232-
Petitioner argues, however, that respondent’s attempted
application of the step transaction doctrine is prohibited under
certain judicial precedents. Petitioner contends that the step
transaction doctrine cannot be applied to invent steps that did
not occur or replace a taxpayer’s chosen route with the
Commissioner’s preferred route when no steps are eliminated.
Petitioner relies on Greene v. United States, 13 F.3d 577 (2d
Cir. 1994); Redding v. Commissioner, 630 F.2d 1169 (7th Cir.
1980), revg. and remanding 71 T.C. 597 (1979); Grove v.
Commissioner, 490 F.2d 241 (2d Cir. 1973), affg. T.C. Memo. 1972-
98; Turner Broad. Sys., Inc. & Subs. v. Commissioner, 111 T.C.
315 (1998); Esmark, Inc. & Affiliated Cos. v. Commissioner, 90
T.C. 171 (1988), affd. without published opinion 886 F.2d 1318
(7th Cir. 1989). We conclude that these precedents are legally
and factually distinguishable from the instant cases.
Greene v. Commissioner, supra, and Grove v. Commissioner,
supra, like Blake v. Commissioner, supra at 478-479, addressed
the application of the step transaction doctrine in situations
where the taxpayer “contributed” a substantially appreciated
asset to a charitable or tax-exempt entity to sell. In Blake,
the critical inquiry in the court’s step transaction analysis was
whether the transactions were undertaken pursuant to an advance
understanding. In Blake, because the Court of Appeals for the
Second Circuit determined that the Tax Court’s finding of a
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