Pabst Brewing Company - Page 22

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          rights) had each of their shares converted into one $24 principal           
          amount 15-percent subordinated, sinking fund note of petitioner             
          with a 10-year maturity.9  As a result, the former shareholders             
          of petitioner, other than Heileman, had no further equity                   
          interest in petitioner following the transaction.                           
               Olympia stockholders of record at the time of the                      
          transaction had each of their Olympia shares converted into the             
          right to receive:  (1) One share of petitioner's stock and                  
          (2) cash equal to the excess, if any, of $26 per share over the             
          average market value of petitioner's shares during a specified              
          11-day trading period.  As a result, the former Olympia                     
          shareholders became petitioner's new shareholders following the             
               On its tax returns, petitioner reported the distribution of            
          the Transferred Assets as a sale subject to section 1001, and it            
          used the $190,287,375 amount set forth in the Allocation                    
          Agreement as the amount realized on the sale.  For the taxable              
          period January 1 through March 18, 1983, petitioner reported a              
          net gain of $40,362,574 resulting from the transfer of some of              
          the Transferred Assets to Heileman on the latter date.  For the             
          taxable period March 19 through December 31, 1983, petitioner               

               9 In order to discourage future hostile takeover attempts,             
          tender offers, and proxy contests, certain provisions of the                
          indenture, pursuant to which these notes were issued, limited the           
          incurrence of indebtedness for the purpose of acquiring                     
          petitioner's shares.  Petitioner also amended its certificate of            

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