In this article, Lee first describes the mechanics and tax effects of cost basis corporate acquisitions and analyzes why current tax rules favor such acquisitions over carryover basis acquisition (e .g., tax-free mergers); then he describes the House's proposed repeal in HR 3838 of the General Utilities doctrine in current sections 336-338, focusing on the continued exemption for long-term capital gains of a closely held active business corporation. This sets the stage for analysis of the Corn Products doctrine, which under an "integral asset" reading would deny the exemption to most appreciated operating assets, surely not the intent of the drafters. The article describes the conflicting isolated sales reading, the prior case law development of both readings as to depreciable operating assets (section 1231) and section 337, and asks for congressional clarification. The footnotes explore a number of policy issues, e.g., repeal of General Utilities, and additional doctrinal conflicts.

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30 Tax Notes 1375-1386 (1986)