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returns was complete and accurate in all respects, and (3) that
Tri-Power had paid all the taxes it was obligated to pay. The
letter of intent contained no provision conditioning the
acquisition on the receipt of a favorable opinion concerning Tri-
Power's reserves. The letter of intent, however, did require
Tri-Power to represent that it had no information or reason to
dispute, in the aggregate, the accuracy of LAM's reserve
estimates. In a letter dated October 27, 1986, Tri-Power refused
to make the requested representation, stating that "we have
provided engineering reports to you for your information,
however, you must satisfy yourself as to their adequacy for your
purposes."
At its regular quarterly meeting on November 6, 1986,
petitioner's board authorized the acquisition of Tri-Power.
Petitioner's board also authorized the transfer of petitioner's
existing oil and gas properties to Tri-Power.
On November 14, 1986, petitioner issued a second letter of
intent to acquire the stock of Tri-Power. The second letter of
intent also conditioned the acquisition on petitioner's receipt
of an opinion from its tax advisers.
On November 17, 1986, Arthur Andersen issued a favorable tax
opinion, discussed supra, relating to the acquisition of Tri-
Power, its prior activities, and the future use of its NOL's.
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