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lease. During early 1990, AST exercised its option under the
option agreement and purchased from MSSTA the 45 S accounts for
$22,500.
In January 1991, Mr. Scott's services as president of AST
were terminated after Mr. Scott, Mr. Harrison, and Mr. Hall had a
dispute over management styles. AST offered to purchase the
Scotts' aggregate 33-percent stock interest in that corporation,
but Mr. Scott disagreed with the purchase price that AST offered.
As a result of, inter alia, that disagreement over the purchase
price, the Scotts sued AST as well as Mr. Harrison and Mr. Hall
individually. On June 27, 1991, that lawsuit was settled, and,
pursuant to the terms of the settlement, AST redeemed the Scotts'
aggregate 33-percent stock interest in AST and agreed to indem-
nify the Scotts in an aggregate maximum amount of $30,000 for any
tax liability of MSSTA for which they were determined to be
liable.
Beginning around late April 1991, the Service audited
MSSTA's 1989 return (Form 1120). As part of that audit, the
Service examined the MSSTA transaction, including MSSTA's sale of
its assets to AST.
Pursuant to section 6501(c)(4), on June 25, 1993, and on
July 22, 1994, MSSTA and respondent consented in writing to ex-
tend the time within which to assess MSSTA's tax liability for
1989 to October 31, 1994, and February 28, 1995, respectively.
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