Third. They argue that the sales proceeds were not used by APECO because other sources of funds were available to it. Petitioners further contend that there was no intention to withdraw the sales proceeds from APECO when the horses were contributed and the distribution of the sales proceeds was precipitated by events that were unforeseen at the time of the transfer. Respondent's position is that, although the transaction was cast as a sale of the horses by APECO, the substance of the transaction was that Mr. Kluener sold the horses using APECO as a conduit and that the gain realized on the sale therefore must be charged to him. Respondent contends that Mr. Kluener had decided to sell the horses for personal reasons prior to transferring them to APECO and that the sole purpose for transferring the horses to APECO was to use its NOL's to avoid tax on the gain realized on the sale. Respondent maintains that Mr. Kluener kept control of the horses and the sales proceeds while they were nominally held by APECO, concealing from the other officers and directors of APECO the fact that the transaction involving the horses was conducted in the name of APECO, as well as the e xistence of the accounts in which the sales proceeds were held. Respondent notes that the sales proceeds were never used to fund APECO's operations, which instead were financed by loans from Mr. Kluener using funds from his bank accounts. Respondent also points to the distribution to Mr. Kluener of all of the sales proceeds and earnings held in the name of APECO several monthsPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
Last modified: May 25, 2011