Thor Energy Resources and Subsidiaries - Page 13

                                         13                                           
          declared by S&B on April 29, 1988, should have been revealed in             
          one or more of the SPA sections 4.8, 4.18, or 4.20.  Yet no                 
          dividend is mentioned in the corresponding schedules in the SPA.            
          It was not until November 1988 that S&B recorded on its books a             
          dividend payable in the amount of $1,245,880.36 and charged the             
          same amount against preacquisition retained earnings and profits            
          of S&B.                                                                     
               We conclude that the minutes of S&B's board meeting held on            
          November 14, 1988, did not reflect accurately events, if any,               
          that transpired on April 29, 1988.  Fender testified as follows:            
               Q. Was there a meeting of the board of April 29, 1988,                 
               wherein the board of directors of the subsidiary                       
               declared a dividend from the subsidiary to the parent?                 
               A.   I don't specifically recall it, but it was our                    
               practice to have a meeting every quarter and we                        
               obviously did, based on the ratification of the minutes                
               of that meeting in November. * * *                                     
          Petitioner's only other witness at trial, Richard Anderson, had             
          no personal knowledge of any meeting or informal discussion of              
          the S&B board on April 29, 1988.  The minutes of the special                
          meeting of S&B's board of directors held on April 26, 1988,                 
          indicate that the board discussed the status of the management              
          group's proposal to purchase the S&B stock, but there is no                 
          mention of S&B's declaring a dividend.                                      
               Petitioner argues that, pursuant to Litton Indus., Inc. v.             
          Commissioner, 89 T.C. 1086 (1987), the amount at issue in this              
          case constitutes a dividend to Thor and not part of the proceeds            





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011