02-13-1984 Industrial Development Corporation Board of Directors Meeting (2)

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-~ C 8. Cost to the lessor of personal property leased under a. true lease for federal income tax purposes either from ._ the manufacturer or from a person in the trade or'bu~si- ness of leasing similar property provided, pursuant to .. .general business practice,. property of this type ordi- narily is the subject of a lease. Treas. Reg. §1.103- - 10(b)(2)(iv)(b}; LTR 7925037. However, if ~;. t'rin- ~ -cipal user of a facility purchases the personal prop- erty within three years of L~he bond issue, sells it to a leasi*~g company, and re-leases it, a capital extiendi- ture was incurred on the occasion of the purchase in ' the amount thereof regardless of the subsequent sale and re=lease. Rev. Rul. 79-2a8, 1979-34 I.R.B. 5. But see Rev. ~tul. 80-162, 1980-25 I.R.B. 5 (no actual pur- chase even though purchase order submitted and down payment made). In addition, expenditures by the ground lessor wiL~.h respect to the facility on the leased ground - are capital expenditures; - but,' of course, only i f made . within three years of the date of the bond issue. LTR 7fi3301S; LTR 7951067; LTR 8011062. _ 9. I_=seance of stock or securities :for property in a tax- .~ free incorporation or other exchange under Section 351(a) of the Code. Treas. Reg:~§1.103-10(b)(2)(v)(c). If Section 351(a~) applies to a transfer during the 6- year period surrounding the date of issue, ar_d if, with respect to the property transfe-rred, expenditures made within such period would have been Section 103(b)(6~"(D) capital expenditures if the transferor and the trans- feree corporation had been related persons for such period, then such expenditures shall be considered to be Section 103(b)(6)(D) capital expenditures made by the transferee corporation. In addition, if a trans- feror and tra_*~sferee are related persons immediately following such transfer, such transferor and transferee shall also be treated as having been related persons for the portion of such 6-year period preceding the date of suc:~ transfer. Treas. Reg. §1.103-10(b)(2) (~) (d) . : ur thermore, the purchase by the shareholder or security holder of such property is a capital expen- diture if made within the 6-year period. 10. Exchange of consideration for assets in a tax-free re- organization or ~iguidation which qualifies under Sec- tion 381(a) of the Code (relating to carryover of tax attributes}; but the transferor and transferee are treated as related throughout the portion of the six-