Illinois Power Co. v. Commissioner
United States Tax Court
P incorporated IPFC and in form: (1) Gave 50 percent of IPFC's stock to MU; and (2) sold nuclear fuel to IPFC who simultaneously leased the fuel back to P (the "sale-leaseback"). Held: 1. P may not disavow the form of the transfer of stock to MU, but may disavow the form of the sale-leaseback.
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P incorporated IPFC and in form: (1) Gave 50 percent of IPFC's stock to MU; and (2) sold nuclear fuel to IPFC who simultaneously leased the fuel back to P (the "sale-leaseback"). Held: 1. P may not disavow the form of the transfer of stock to MU, but may disavow the form of the sale-leaseback. Comdisco, Inc. v. United States, 756 F.2d 569 (7th Cir. 1985), followed. 2. The sale-leaseback constituted a financing for Federal tax purposes, with the result that P is not required to recognize gain on the "sale" of the fuel. 3. P may deduct its liability for "lease" charges for 1980. 4. P did not…
1Opinion of the Court
KÓRNER, Judge:
Respondent determined a Federal income tax deficiency against petitioner for the taxable year ended December 31, 1981, in the amount of $4,543,330.80.
After concessions, the issues remaining for decision are: (1) Whether petitioner’s transfer of 50 percent of the common stock of Illinois Power Fuel Co. to Millikin University on February 2, 1981, should be disregarded so that Illinois Power Fuel Co. is considered a member of its “affiliated group” for purposes of petitioner’s consolidated return; (2) whether a transfer of nuclear fuel by petitioner to Illinois Power Fuel Co. on…
2Cases cited60 opinions
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- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- United States v. AndersonSupreme Court of the United States · 1926
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
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