notes receivable. The $1,364,071 in expenses includes payments
for: (1) General accounting advice and SEC financial reporting
with regard to the distribution; (2) tax and securities advice
and general counsel work relating to the distribution; (3) a
fairness opinion; (4) fees relating to the mortgage on the
timberlands; (5) fees relating to the listing of the partnership
units; (6) transfer agent fees; (7) legal services in connection
with the distribution; (8) real estate advice; (9) printing the
proxy statement issued in connection with the distribution; and
(10) various other costs such as employee reimbursement for
distribution-related travel and lodging. The expenses in
question were not incurred for the transfer of cash to the
Partnership or the separate sale of the installment notes
receivable.
Respondent's Rule 155 computation, however, allocates a
portion of the $1,364,071 in expenses to all assets conveyed to
the Partnership, including the working capital and the
installment notes receivable sold to the Partnership, based upon
their relative values. Of the total distribution expenses,
respondent's computation allocates $124,726 to the installment
notes receivable and $37,180 to the working capital. Because
petitioner realized no section 311(d) gain on the distribution of
these two assets, the distribution expenses allocated to these
assets under respondent's computation fail to offset petitioner's
section 311(d) gain. Respondent's Rule 155 computation, which
allocates $161,906 of the expenses to the working capital and the
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Last modified: May 25, 2011