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By 1992, EPL had changed its name to Micro Bio Logics, Inc.
(MBL), and in 1992 MBL conducted an unsuccessful public offering
of its common stock and warrants.
On EPL’s original and amended 1988 corporate Federal income
tax returns, $1.6 million in forgiveness of indebtedness income
was reported relating to the $1.6 million in purported debt to
petitioner that petitioner in 1988 allegedly forgave.
Based on EPL's 1988 corporate Federal income tax return, but
for the $1.6 million in forgiveness of indebtedness income that
was reported, EPL would have reported on its 1988 corporate
Federal income tax return a net operating loss for 1988 in the
amount of $717,119.
As a result of its 1988 operations and its net operating
loss carryforward from prior years, the $1.6 million in
forgiveness of indebtedness income that EPL reported for 1988 did
not result in any reported tax liability for EPL.
Further, in January of 1988, petitioner sold his stock in
Coborn's, Inc. (Coborn), another closely held corporation in
which petitioner had an interest, and petitioner realized from
this sale a long-term capital gain of $2,044,988. In 1988, 1989,
1990, and 1991, petitioner recognized and reported $855,089,
$451,494, $30,786 and $34,730, respectively, of this capital
gain.
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