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Dazs, contain any of the other information required by the
regulations under sections 351, 355, or 368, or allocate earnings
and profits between petitioner and SIC as required by section
312(h) and associated regulations with respect to a transaction
governed by sections 355 and 368(a)(1)(D).
On April 10, 1989, SIC filed Form 1120S for its tax year
1988, which included a statement disclosing the sale of assets by
SIC, including records and goodwill for $286,068 and the “right
to distribute the product of buyer for $1,144,272”.13 The
statement also disclosed that Arnold, as sole stockholder
distributee, would report the gain on his personal income tax
return for taxable year 1988. On July 14, 1989, Arnold caused
SIC to be dissolved under New Jersey law.
For each tax year thereafter through 1995, MIC reported the
following losses and gross sales as compared with 1988 and
earlier years:
13 This statement attached to the SIC Form 1120S indicates
that the downward adjustment of $69,660 to the purchase price
paid by H�agen-Dazs at closing was allocated between the
distribution rights and business records of SIC in the same
proportions as the relative amounts of the preadjustment
allocation of the purchase price to be paid at the closing--80
percent, or $55,728, to the distribution rights, and 20 percent,
or $13,932, to the business records. The closing documents do
not set forth or otherwise contain any reference to the
allocation between distribution rights and business records of
the reduction in the price paid at closing.
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