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Taxpayers have more planning flexibility in reorganization after Seagram - If it survives
Journal of Taxation; New York; Jun 1995; Bloom, Gilbert D;

Duns:00-136-8554Duns:00-131-5704Duns:00-842-7692

Volume:	82
Issue:	6
UMI Publication No.:	01031800 00519720
Start Page:	334
Page Count:	7
Source Type:	PERIODICAL
ISSN:	00224863
Subject Terms:	Tax regulations Tax free reorganization Tax court decisions Reg. 1.368-1(b) Prop. Reg. 1.338-2(c)(3) Continuity of interest Acquisitions & mergers 104 TC 4 Tax regulations Tax free reorganization Tax court decisions Reg. 1.368-1(b) Prop. Reg. 1.338-2(c)(3) Continuity of interest Acquisitions & mergers 104 TC 4
Classification Codes:	9190: US 4330: Litigation 4210: Institutional taxation 2330: Acquisitions & mergers
Geographic Names:	US US
Companies:	Seagram & SonsDuns:00-136-8554 E I Dupont De Nemours & CoTicker:DDDuns:00-131-5704 Conoco IncDuns:00-842-7692 Seagram & Sons E I Dupont De Nemours & CoTicker:DD Conoco Inc
UMI Journal Code:	JTX

Abstract:
The doctrine of continuity of shareholder interest has no legislative underpinnings - its origins are wholly judicial and its propagation largely administrative. First crafted by the courts to distinguish taxable sales from tax-free exchanges, it has mutated into a barely recognizable form. Recent developments - particularly in the Tax Court's decision in J. E. Seagram Corp. - have generated new questions about the scope of the doctrine and its application. In this case, the Tax Court determined that continuity of interest does not depend on whether the target shareholders sold their stock after the acquiring organization announced its acquisition intentions. Rather, the court concluded that the emphasis in earlier cases was on the nature of the aggregate consideration furnished by or on behalf of the acquiring corporation in all the steps in the acquisition. The court also rejected Seagram's contention effort to draw an analogy between postmerger sales to third parties of acquiring corporation stock received in the merger and premerger sales to third parties by target shareholders. No case before Seagram turned on whether a sale to a third party vitiates continuity.