- 17 -17
ASA (i.e., the $434,749,000 notional principal amount of the
LIBOR notes would have been greater without the cost). Merrill
Lynch valued the LIBOR notes at $163,931,068, which was
calculated as follows:
Face Amount $850,000,000
Less:
75 b.p. cost (6,375,000)
Net Amount 843,625,000
Plus:
Accrued Interest 1,606,068
Less: Cash (681,300,000)
Value 163,931,068
On its partnership books, ASA recorded the LIBOR notes' value at
$170,306,068 (i.e., adding $6,375,000, attributable to the cost
of the PPNs sale, to the $163,931,068 fair market value of the
LIBOR notes).
2. Installment Sale Reporting
Because the LIBOR notes provided for 20 quarterly payments
that varied with LIBOR, ASA could not determine the PPNs'
aggregate selling price by the end of its May 31, 1990, taxable
year. Pursuant to section 15A.453-1(c), Temporary Installment
Sales Regs., 46 Fed. Reg. 10711 (Feb. 4, 1981), ASA used the
installment method for contingent payment sales to report the
sale of the PPNs. This regulation provides for the ratable
allocation of basis over the term of a fixed-term contingent
obligation.
For the taxable year ending May 31, 1990, ASA recovered
$141,856,639 (i.e., 1/6) of its reported $851,139,836 basis in
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011