5 In 1978 and 1979, Northeast established a line of credit with Guaranty Bank & Trust Company (the bank) in Massachusetts. McKee signed a guaranty dated March 3, 1978, for the line of credit. Northeast used its assets as collateral for the loan. In December 1979, the bank lent about $1.2 million to Northeast on the line of credit. Petitioner signed a guaranty with the bank around January 11, 1980. Northeast used its line of credit with the bank to take title to paper when it was advantageous to do so. Northeast had retained earnings of $107,058.15 on December 31, 1978, and $183,747.33 on December 31, 1979. At the end of 1979, petitioner submitted a financial statement to the bank in which he estimated that the value of his interest in Northeast as a going concern was about $1 million. Zayre Corp. (Zayre) was a customer of Northeast. Northeast contracted to sell paper to Zayre. Consolidated Newsprint, Inc. (CNI) produced and sold paper for newsprint and newsprint advertising and contracted to regularly sell products to Northeast. 3. Sigma General, Inc. Petitioner owned all of the stock of Sigma General, Inc. (Sigma), a New Hampshire corporation he formed in 1978. Sigma placed orders for printing advertising material to be distributed by newspapers. In 1979, Sigma placed orders totaling about $10 million. Petitioner estimated that the value of his interest inPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011