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Cash Distributions on Certain Stock
Cash Distributions From Gulf States Utilities Company
During 1992, petitioner George R. Hawthorne (Mr. Hawthorne)
owned shares of two classes of preferred stock of Gulf States
Utilities Company (Gulf States). During 1992, Gulf States, which
had not paid any dividends to its preferred stockholders since
December 15, 1986, paid Mr. Hawthorne (1) $14,454 with respect to
the shares of one of the classes of Gulf States preferred stock
that he owned and (2) $12,648 with respect to the shares of the
other class of Gulf States preferred stock that he owned, or a
total of $27,102. Gulf States reported the total amount that it
paid to Mr. Hawthorne as "Ordinary dividends" in Form 1099-DIV
for 1992. In their 1992 return, petitioners included the amount
reported in that form as dividend income.
A letter dated June 19, 1992, from Entergy Corporation
(Entergy) to "Fellow Stockholder" stated in pertinent part:
Entergy Corporation and Gulf States Utilities Company
entered into a definitive agreement on June 5, 1992,
providing for the combination of the two companies.
* * *
Under the terms of the agreement, Entergy and GSU will
form a new holding company that will acquire all of the
common stock of Entergy and GSU. The new holding
company, which will be renamed "Entergy," will own all
of the common stock of GSU * * *.
Completion of the transaction is subject to, among
other things, the approval of the common stockholders
of Entergy and GSU and the receipt of all required
governmental and regulatory approvals. * * *
In the transaction, GSU common stockholders can elect
to receive $20 in either cash or shares of common stock
of the new holding company for each share of GSU common
stock. The maximum amount of cash to be paid to GSU
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