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possibility of disassociating themselves. The meeting ended with
plans for Hess, Briggs, Morris, and Daniell to travel to Colorado
to meet with JSL. The ACT shareholders (except Gay) and Hess met
with JSL in Colorado on October 27, 1988.
ACT employed the firm of Williams, Cox, Weidner & Cox (WCWC)
as their accountants. Prior to traveling to Colorado, ACT
contacted WCWC regarding the possible sale of ACT assets to JSL.
Mack Shepard (Shepard) and Joel Turner (Turner) were both
accountants at WCWC. Shepard had been handling the ACT account.
Shepard asked Turner to research various options on how ACT could
structure the contemplated JSL sale from a tax perspective.
Turner researched the issue and prepared a memorandum that
outlined several alternative methods on how to structure the
sale, including liquidation. Turner faxed the memorandum to
Briggs, Morris, Daniell, and Hess in Colorado on October 27,
1988.
After sending the fax, Turner did not communicate with any
ACT shareholders until December 1989, over a year after the sale
to JSL. Hess was not a tax attorney and did not advise ACT with
regard to the tax consequences of the sale.
Hess, Briggs, Morris, and Daniell finalized the sale of ACT
assets to JSL in Colorado on October 27, 1988. The final sales
price was $1,522,080, which included the sum of $500,000 for a
noncompetition clause. The agreement stated in part:
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