Winn-Dixie Stores, Inc. and Subsidiaries - Page 37




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          equal to premiums paid (i.e., Winn-Dixie's tax basis) and apply             
          the withdrawal to repay an equal amount of loan."  The booklet              
          indicated that the result of such a withdrawal and repayment is a           
          policy with a greatly reduced cash value, substantially all of it           
          borrowed.                                                                   
               The third strategy, the aggressive tax strategy, suggested             
          that under the revised statute, deductions were disallowed only             
          with respect to policies on the life of an individual who was an            
          officer or employee or was financially interested in petitioner's           
          trade or business.  The booklet further indicated that counsel              
          for Coventry believed that a strong argument could be made that             
          the disallowance described by the statute did not apply where the           
          insured was a former officer or employee or was not financially             
          interested.  Based on this argument, the booklet gave an example            
          which assumed an additional $200 million of aggregate                       
          indebtedness could be attributed to petitioner's former employees           
          upon whom policies were still maintained.  As a result of the               
          additional $200 million of aggregate indebtedness, the booklet              
          concluded that the tax savings in each year would be equal to 39            
          percent of 11 percent of $200 million or $8,580,000, for as long            
          as the loans remained in force.                                             
               In a letter to Mr. Qureshi dated September 8, 1997, Mr.                
          McCook indicated that in light of the passage of the legislation            
          pertaining to leveraged COLI, petitioner was working toward a               





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