John F. and Tracy L. Barford, et al. - Page 4

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          Farms.  On the same date they received the notes, petitioners               
          assigned the notes to their partnership, TMC Enterprises.  TMC              
          Enterprises was a general partnership in which petitioners were             
          equal partners during the years in issue.                                   
               On April 1, 1984, the debts owed by RAM Drilling and TMC               
          Farms to TMC Enterprises were restructured as zero percent                  
          convertible subordinated debentures in the total amounts of                 
          $3,195,285 and $1,655,000, respectively.                                    
               In the notices of deficiency, respondent determined, among             
          other things, that petitioners were liable for additional taxes             
          as a result of: (1) Imputed interest income on promissory notes             
          from RAM Drilling and TMC Farms pursuant to section 482, and                
          (2) the incorrect valuation of the RAM Drilling stock for                   
          purposes of the section 337 liquidation of TMC Resources.  (This            
          second issue was not in the notice of deficiency for 1979 and               
          1984 for Marcus R. Messman.  Marcus R. Messman received two                 
          notices of deficiency.)  Petitioners raised only these two                  
          issues in their petitions.                                                  
               The parties eventually settled the issue of the value of               
          RAM Drilling stock for purposes of the section 337 liquidation              
          of TMC Resources.  On March 10, 1993, the case proceeded to                 
          trial on the remaining section 482 imputed interest income                  
          issue.                                                                      






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