Thomas H. Scott and Lynn D. Scott, Transferees - Page 15

                                       - 15 -                                         

          consider his opinion about MSSTA's tax liability to constitute              
          his opinion as to whether the $300,000 purchase price, as set               
          forth in the Bosworth letter, would be sustained if MSSTA's                 
          return were audited by the Service.                                         
               As requested in the Bosworth letter, Mr. Hrynik also pre-              
          pared a letter (solvency letter), dated September 13, 1989, which           
          he sent to the board of directors and stockholders of MSSTA.  The           
          solvency letter stated:                                                     
               We have been requested to provide our opinion relative                 
               to the solvency of the Company [MSSTA] subsequent to                   
               the Company's sale of assets to American Securities                    
               Transfer, Inc. and the redemption of James R. Carter's                 
               common stock.                                                          
               Section 7-6-102 of the Colorado Corporation Code pro-                  
               vides that no redemption or purchase of redeemable                     
               stock shall be made by a corporation when it is insol-                 
               vent or when such redemption or purchase would render                  
               it insolvent and further provides that a corporation                   
               may redeem its stock only out of surplus.  Section 7-1-                
               102 of the Code defines insolvency as the inability of                 
               a corporation to pay its debts as they become due in                   
               the usual course of its business.                                      
               In our opinion, based on the Company's unaudited bal-                  
               ance sheet at August 31, 1989, there will be, immedi-                  
               ately after the asset sale, adequate unreserved and                    
               unrestricted surplus to purchase Mr. Carter's stock.                   
               Further, subsequent to the stock redemption and based                  
               on management's statement that the Company [MSSTA] will                
               continue to operate in a limited capacity and generate                 
               approximately $10,000 per month in gross revenue, the                  
               Company will have the ability to pay its debts as they                 
               become due in the usual course of business.                            
          At the request of Mr. LaPlante, the only transactions that were             
          part of the MSSTA transaction which Mr. Hrynik considered in                
          opining on the solvency of MSSTA are those described in the first           

Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011