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The freedom to arrange one’s affairs to minimize taxes
does not include the right to engage in financial
fantasies with the expectation that the Internal
Revenue Service and the courts will play along. The
Commissioner and the courts are empowered, and in fact
duty-bound, to look beyond the contrived forms of
transactions to their economic substance and to apply
the tax laws accordingly. That is what we have done in
this case and that is what taxpayers should expect in
the future. * * * [Saviano v. Commissioner, 765 F.2d
643, 654 (7th Cir. 1985), affg. 80 T.C. 955 (1983).]
From any perspective, the “true economic effect”
(petitioner’s words, quoted above) of the Bender transaction was
a sale. Because the consideration paid by the buyer, to wit,
unfettered control over $1.375 billion in cash, passed to the
seller from the buyer, the Bender transaction does not qualify as
a reorganization under section 368(a)(1)(B), which requires that
the exchange be solely for stock. Because the MB Parent common
stock lacked control over any assets, its value was negligible in
comparison to the $1.1 billion value that would be required to
qualify the Bender transaction as a tax-free reorganization under
section 368(a)(1)(A) and (a)(2)(E).
Evidentiary Matters
The extensive stipulations of the parties included certain
documents to which objections were made with the understanding
that the objections would be discussed in the posttrial briefs.
Respondent objected on relevance, materiality, and hearsay
grounds to four articles concerning the failed merger between
Reed and Wolters Kluwer. Petitioner did not address these
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