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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
transaction.
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
incorporation.
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