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export receivables by CVI would result in recognition of income
by CV at the time of the purchases, a plan was developed during
September 1982 by CV's tax department and its outside
accountants, Price Waterhouse, both to avoid recognition of
income from the purchase of qualified export receivables and to
maintain CVI's status as a DISC (the plan). Under the plan, when
CV became obligated to pay CVI the proceeds collected with
respect to CVI’s interest in the qualified export receivables on
September 30, 1982, CVI would use the proceeds of the investment
to fund demand loans to CV that would not be "qualified export
assets" within the meaning of section 993(b). CVI would call
those loans prior to the end of its taxable year and use their
proceeds to (1) purchase qualified export receivables, (2)
reimburse CV for export promotion expenses incurred on behalf of
CVI, and (3) pay a dividend to CV. It was expected that the
execution of the plan would cause CVI to satisfy the 95 percent
of assets test provided by section 992(a)(1)(B) at the close of
its taxable year. The plan was approved by Mr. Krieger and Mr.
Spindler. By purchasing CV's qualified export receivables at the
end of January of 1983, CVI sought to minimize the amount of the
receivables that might be paid before the end of its taxable year
because the conversion of the receivables to cash could have
caused CVI to fail the 95 percent of assets test.
The following series of events occurred pursuant to the
plan. First, CVI made demand loans to CV on the following dates
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Last modified: May 25, 2011