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NITCO as a limited partner in the RSA #1 limited partnership.
Under the original RSA #1 partnership agreement entered in mid-
1989, NITCO and the other partners had agreed that subsidiaries
or affiliates of a partner would be allowed to assume the
partner’s rights and obligations in and to the partnership.
In 1990, Serv-U-Cellular received $750,000 as a result of
the agreement to cede the northern portion of the rural
statistical number one area to Ameritech. NITCO received the
$750,000 from Ameritech and paid it to Serv-U-Cellular.
Pursuant to Mr. Mussman's plan, Serv-U-Cellular was to be
owned individually by him and Rhys. Mr. Mussman was to own 6
percent and Rhys was to own 94 percent of Serv-U-Cellular's
outstanding shares of stock.
Mr. Mussman subsequently decided to abandon his plan that he
and Rhys individually own Serv-U-Cellular, as a result of the
Internal Revenue Service’s (IRS) commencement of the examinations
that led to the instant proceedings. On its 1990 return dated
September 12, 1991, NITCO reported in its income $696,772 of the
$750,000 payment that Serv-U-Cellular had received from
Ameritech. Attached to its Form 1120 for the tax year 1991,
Serv-U-Cellular notified the IRS of the termination of Serv-U-
Cellular's S corporation status as a result of the transfer of
all its shares to NITCO on January 1, 1991. However, on its
annual reports for 1990, 1991, and 1992, to the FCC and the
Indiana Utility Regulatory Commissioner (IURC), NITCO did not
report that it had any subsidiaries.
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