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undertakings to provide Endotronics with management services and
necessary financing.6
5. If the 3- and 6-year periods of limitation on assessment
have expired on respondent’s right to take the actions described
in any or all of the foregoing questions, would respondent still
have any arguably valid grounds for taking any such actions
against petitioner and/or petitioner’s controlling person or
persons, as might be shown to be appropriate? Cf. Burke v.
Commissioner, 105 T.C. 41 (1995), with Zackim v. Commissioner,
91 T.C. 1001 (1988), revd. 887 F.2d 455 (3d Cir. 1989).
This is a fully stipulated case that was submitted without a
trial pursuant to Rule 122, and with only one round of
concurrently filed briefs. Included in the stipulated record,
apparently at petitioner’s request, is the Debtor’s
[Endotronics’s] Amended Disclosure Statement, which contains the
plan of reorganization above referred to. Petitioner’s Proposed
5(...continued)
presented by the example is how the $8 million of consideration
is to be allocated between the preferred and common stock.
6 Petitioner’s undertaking to provide necessary financing,
as well as management services, would appear to cause the shares
allocable to that undertaking to be treated as a commitment fee,
included in the gross income of the recipient as compensation for
services at the time of accrual or receipt. See Rev. Rul. 70-
540, 1970-2 C.B. 101 (issue 3), declared obsolete on another
issue by Rev. Proc. 94-29, 1994-1 C.B. 616, 621; see also
Chesapeake Fin. Corp. v. Commissioner, 78 T.C. 869, 879 (1982);
Metropolitan Mortgage Fund, Inc. v. Commissioner, 62 T.C. 110,
120 (1974).
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