Anschutz Co. v. Commissioner
United States Tax Court
P-PA, an individual, owned P-AC, an S corporation. TAC is a wholly owned qualified subch. S subsidiary of P-AC, and its items of income and gain are reported on P-AC's Federal tax return. P-PA used TAC as an investment vehicle. TAC held the stock of companies that P-PA decided to invest in. TAC entered into a master stock purchase agreement (MSPA) for the sale of some of those corporate stocks in 2000 and 2001 to DLJ, an investment bank.
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P-PA, an individual, owned P-AC, an S corporation. TAC is a wholly owned qualified subch. S subsidiary of P-AC, and its items of income and gain are reported on P-AC's Federal tax return. P-PA used TAC as an investment vehicle. TAC held the stock of companies that P-PA decided to invest in. TAC entered into a master stock purchase agreement (MSPA) for the sale of some of those corporate stocks in 2000 and 2001 to DLJ, an investment bank. The MSPA consisted of forward contracts and share-lending agreements. The forward contracts were prepaid in cash and would be settled with variable numbers…
1Opinion of the Court
Goeke, Judge:
This deficiency case turns on the treatment of stock transactions entered into by the Anschutz Corp. (TAC), a qualified subchapter S subsidiary of the Anschutz Co., during 2000 and 2001. TAC entered into a master stock purchase agreement (MSPA) to sell shares of stock to an investment bank. The MSPA also called for TAC to lend those same shares to the bank. The issue is whether this sale agreement with concurrent share lending requires TAC, and its parent, Anschutz Co., to recognize built-in gain upon entering into the transaction. For the reasons stated herein, we conclude that…
2Cases cited7 opinions
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