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purchased by CVI (viz, $22,485,988), (b) the amount CVI owed CV
as expense reimbursements under the export promotion agreement
(viz, $2,570,631) and accrued State tax.
The foregoing transactions were recorded in CVI's general
ledger by entries that were prepared and approved after January
31, 1983, but prior to the time CV and CVI closed their books in
accordance with their usual accounting practice.
With respect to CVI's taxable year ending January 31, 1984,
the following series of events occurred pursuant to the plan that
had been developed in September 1982. CVI made demand loans to
CV on the following dates in 1983 in the following amounts:
Date Amount of Loan
Mar. 31 $4,694,145
Aug. 29 28,552,907
Oct. 31 3,365,590
Subsequently, on January 27, 1984, the following occurred: (1)
CVI made written demand for payment of both the principal amounts
of the foregoing loans (viz, $36,612,642) and accrued interest
thereon (viz, $1,797,153), which totaled $38,409,795; (2) CV
wired $38,409,795 to CVI in full payment of the principal amounts
and interest on the foregoing loans, and the payment was
deposited in CVI's account with the First National Bank of
Boston; and (3) CVI wired $38,409,795 to CV.
The foregoing transfers were recorded in CVI's general
ledger by entries that were prepared and approved on or before
February 15, 1984, but before CV and CVI closed their books for
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Last modified: May 25, 2011