- 21 -21
AlliedSignal's and ASIC's combined interest in the LIBOR notes
increased from an approximately 60-percent indirect interest to a
100-percent direct interest.
AlliedSignal determined that the LIBOR notes' basis was
$709,283,197, computed as follows:
1/6 of Cost Basis Computed Basis
Initial Cost Basis Allocated to 5/31/90 FYE on Distribution
$851,139,836 - $141,856,639 = $709,283,197
AlliedSignal determined that $697,348,518 of this basis should be
allocated to the LIBOR notes it received and $11,934,677 to the
LIBOR notes ASIC received.
VII. AlliedSignal Sells A Portion of the LIBOR Notes
During 1990, AlliedSignal and ASIC sold LIBOR notes for a
total of $50,454,103. The following chart delineates these
sales:
Date Purchaser Basis As Reported Sale Price
By AlliedSignal
9-06-90 Unibank A/S $82,599,556 $17,502,543
11-16-90 Generale Bank 82,843,620 17,129,250
11-30-90 Unibank A/S 81,077,631 15,822,310
Total 246,520,807 50,454,103
AlliedSignal determined that these LIBOR notes had a total basis
of $246,520,807. Accordingly, on its 1990 Federal income tax
return, AlliedSignal reported $196,066,704 of capital losses
(i.e., $50,454,103 minus $246,520,807) relating to the sale of
the LIBOR notes and a capital gain of $53,926,336 relating to the
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