Coggin Automotive Corporation - Page 9

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               In order to facilitate Mr. Andrews’ eventual sole ownership of         
          the dealership, as well as to provide Mr. Andrews immediately with          
          some degree of control over the dealership’s assets, Mr. Andrews’           
          attorney, Charles Egerton recommended that the dealership’s assets          
          be held by a limited partnership.  Mr. Egerton advised Mr. Andrews          
          that operating the dealership through a limited partnership would           
          afford Mr. Andrews the following advantages: (1) Limited liability          
          protection; (2) the ability to make disproportionate distributions;         
          (3) a single level of taxation; (4) a lower Federal tax rate; (5)           
          the ability to avoid Florida’s State income tax on his distributive         
          share of profits; and (6) the ability to exercise greater control           
          over the potential sale or liquidation of partnership assets.  Mr.          
          Coggin agreed to have the dealership’s assets held by a limited             
          Coggin-Andrews Partnership                                                  
               On December 14, 1990, Imports entered into an agreement with           
          Andrews Automotive Corp. (Andrews Automotive), an S corporation             
          solely owned by Mr. Andrews, to form the Coggin-Andrews                     
          partnership.  The partnership was created through a series of               
          related transactions.  First, Mr. Andrews redeemed all of his stock         
          in Imports, receiving in exchange a promissory note in the amount           
          of $573,207 (the note). (Immediately prior thereto, and in                  
          contemplation of the redemption, Imports made a $1,750,000                  
          distribution to petitioner.)   Then, Mr. Andrews contributed both           

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Last modified: May 25, 2011