- 242 - ii. Primary Loans Judge Goffe determined that several features of the primary loans prevented them from being genuine debt in substance. First, Judge Goffe found that Mr. Kersting and program participants had an understanding at the commencement of a program, as reflected in a number of so-called comfort letters, that a primary loan obligation could be satisfied in full at any time by a mere surrender of the associated stock certificate. In so finding, Judge Goffe rejected Mr. Kersting's testimony that he did not represent to program participants that they could exchange their stock for cancellation of a primary note at any time. To the contrary, Judge Goffe listed the following nine items in support of his conclusion that Mr. Kersting applied the policy outlined in his so-called comfort letters to all program participants: (1) Mr. Thompson's testimony that Mr. Kersting assured him of the exchange policy; (2) Mr. Kersting's description of a stock subscription plan to Mil Harr; (3) Gabriele Kersting's form letter to test case petitioner Terry D. Owens describing a stock subscription plan; (4) Mr. Kersting's form letter describing a leasing corporation plan; (5) Mr. Kersting's form letter issued on the first anniversary of a leasing corporation plan; (6) Mr. Kersting's acknowledgment in a comfort letter that such a letter would be issued to "every participant * * * if it would not weaken YOUR position with the IRS"; (7) Mr. Kersting's broad statement in a later comfort letter that "We will always repurchase the stock issued at aPage: Previous 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 Next
Last modified: May 25, 2011