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Sale executed on March 31, 1987, by which the Property was
transferred to the Laniers. The Laniers assumed the mortgage on
the Property (which had a balance of approximately $293,000),
paid $55,000 in cash, and executed a promissory note in favor of
the Corporation in the principal amount of $77,000.
The Corporation reported the disposition of the Property on
its 1987 Form 1120, U.S. Corporation Income Tax Return, as being
a sale for an amount equal to its adjusted basis in the Property
as of March 31, 1987, or $423,468. Accordingly, the Corporation
did not report any gain or loss on the transaction. Likewise,
the Laniers did not report any income on their joint 1987 Form
1040, U.S. Individual Income Tax Return, as a result of their
purchase of the Property.
The Corporation's earnings and profits for taxable year 1987
were $62,581. The Corporation had accumulated earnings and
profits as of January 1, 1987, totaling $622,124.
From March 31 to September 28, 1987, the Property was owned
by the Laniers, but the premises were leased to the Corporation
at a rate of $10,000 per month. The Corporation continued to own
and operate its franchised Toyota and Volvo automobile
dealerships until September 28, 1987. On that date, the
Corporation ceased being a franchised Toyota and Volvo automobile
dealership d/b/a Acadian Toyota-Volvo and sold its assets to
Harvey, Inc. (Harvey). Also on that date, the Laniers and Harvey
entered into a 10-year lease for the Property with an option in
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Last modified: May 25, 2011