- 17 - Federal income tax purposes.11 In February 1986, LIIBV opened accounts with ABN Bank, New York. LIL owned all of the stock of LIIBV during the years in issue. DeGroote was a director of LIIBV during the years in issue. LIIBV had other directors, including Netherlands residents. Haworth became a director of LIIBV after the years in issue. On October 16, 1986, Haworth (using LTI letterhead) wrote the following to Peter Deege, a director of LIIBV: I should advise you that at our Monday meetings we wish to do the following: 1. Amend the loan agreements from B.V. to our U.S. subsidiaries to provide with effect from September 1, 1986: (a) All sums to be due on demand at interest rates equal to ABN New York prime plus 2 percent, payable on the last business days of each fiscal quarter. (b) Remove all financial ratio covenants. (c) Remove the "ceilings" so that no limits will exist. All loans will be provided as requested but subjected to availabilities of B.V.'s funds. (d) In the case of Laidlaw Transportation, Inc.'s subsidiaries, there will be two loan accounts established, one called principal account and the other called reinvested interest account. (e) To facilitate the quarterly and other changes in loan amounts, all increases/decreases would be entered on a grid promissory note. This system allows the lender to adjust the promissory note automatically without issuing 11 During the taxable years in issue, LIIBV was a foreign- related person with respect to Transit and LWSI within the meaning of sec. 267(a)(3) and sec. 1.267(a)-3(b)(1), Income Tax Regs.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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