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$4,417,617 (1991 Company Note). The payment schedule and
interest terms of the 1991 Company Note were identical to those
of the Provident Loan. Accordingly, the interest income received
by decedent's estate from the 1991 Company Note exactly offset
the interest expense that decedent's estate owed on the Provident
Loan.
Decedent's estate reported on Form 1041, U.S. Fiduciary
Income Tax Return, a capital gain of $2,124,317.90 from the
redemption of the shares of class B stock on December 30, 1991,
of which $765,458.18 was recognized in the fiscal year ending May
31, 1992. The balance of this capital gain was recognized in the
estate's next fiscal year Form 1041. The total capital gains tax
paid was $594,809.
On January 15, 1993, the Company prepaid the 1991 Company
Note to decedent's estate, thus enabling decedent's estate to
repay the Provident Loan. Decedent's estate paid a total of
$1,053,813.96 in interest on the Provident Loan. Decedent's
estate was also assessed a prepayment penalty of $22,088 under
the terms of the Provident Loan.
On June 15, 1993, decedent's estate borrowed $321,000 from
the Company (Third Company Loan). No principal payments have
been made on this loan. Interest is payable annually on the
Third Company Loan, and the first interest payment of $17,109.30
was made on June 15, 1994.
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