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Federal income tax return for the cost of purchasing the options.
However, Warner-Lambert reduced the offer for IMED from $480
million to $465 million.
During the final negotiations, the officers and directors of
IMED met with the law firm Skadden, Arps, Slate, Meagher & Flom
(Skadden, Arps), which represented Warner-Lambert in New York
City. After a meeting with the attorneys from Skadden, Arps in
Manhattan, Monaghan informed Henry that he had structured the
options as long-term capital gain. Subsequently, Monaghan told
Boynton, in response to Boynton's question, that the option
proceeds would be treated as long-term capital gain.
On July 8, 1982, the Swiss trust that held the 1981 options
was dissolved. The assets of the trust, the 1981 options,
reverted to IMED. In August 1982, Warner-Lambert purchased all
of the outstanding stock of IMED for approximately $163 per
paired share of stock in IMED and International. Warner-Lambert
paid a total of $465 million for all of the outstanding stock
plus the extant stock options belonging to employees of IMED.
Warner-Lambert, through IMED, issued Henry a 1982 Form W-2
that was filed as part of petitioners' 1982 Federal income tax
return declaring $92,874.60 as income. Neither Warner-Lambert
nor IMED provided Henry with another Form W-2 or 1099 or other
form or statement that declared his stock option proceeds as
income.
Robert E. Douglas
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