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The shareholders of * * * [BMCT] and FiberComm are also
related to the majority shareholder of NITCO. Because
the partners are all related entities, the assets
contributed to the partnership were recorded at book
value for financial reporting purposes.
Contributed assets and liabilities at book value are
summarized as follows:
BMCT FiberComm NITCO
Cash $(834) $25 $3,615,771
Other current assets 402,145 -- --
Cellular communica- 2,591,958 4,075 --
tions assets
Licenses & 3,099,068 43,331 --
intangibles
Current liabilities (510,420) -- --
Long-term debt (6,382,521) (12,093) 210,920
Net capital (800,604) 35,338 3,826,691
contributions
* * * * * * *
The limited partner has contributed certain equipment
for use by * * * [the BMCT limited partnership], the
value of which has not been reflected in the assets or
capital accounts. In addition, interest of $210,920
was accrued on the note to the limited partner prior to
its conversion to a capital contribution.
On June 9, 1994, shortly before the trial in the instant
cases, NITCO's interest in the BMCT limited partnership was
redeemed for about $3.6 million.
Although petitioners offered expert witness testimony at
trial as to the value of the Oregon rural statistical area number
three and Washington rural statistical area number eight cellular
telephone businesses, as of March 31, 1991, their experts’
appraisal reports grossly inflated the actual value of these
cellular telephone businesses. One appraisal report concluded
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