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to Loral, and in spite of Quintron’s name change on October 27,
1993, to “Nicole Rose Corp.”, for convenience generally
hereinafter we refer to Quintron as “petitioner”.
The $20.5 million received on the sale of assets to Loral
was used by petitioner to pay off most of the bank loan obtained
to purchase the stock in Quintron.
Upon the sale of assets to Loral (due to petitioner’s low
carryover tax bases in the assets) petitioner would be required
to recognize on its 1994 Federal income tax return approximately
$11 million in income.4
The above $11 million in income that petitioner would have
to report on its 1994 Federal income tax return (relating to
petitioner’s sale of assets) explains the transactions that were
entered into in order to produce the claimed $22 million in
ordinary Federal income tax deductions that are at issue herein.
Petitioner, QTN, IPG, other entities controlled by Wolf, and
other domestic and foreign entities, planned and participated in
a series of complicated, tax-oriented transactions involving the
establishment and transfer of petitioner’s interests in certain
leases of computer equipment and related trusts.
We first explain the background and history relating to the
leased equipment. We then seek to explain the complicated tax-
oriented maneuvers that petitioner and others entered into in
4 Because the stock in Quintron was purchased by QTN, followed
by QTN’s merger into Quintron, Quintron’s tax bases in the assets
were not, prior to the sale to Loral, adjusted to fair market
value.
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