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the note and $107,000 in cash to Andrews Automotive. Finally,
Andrews Automotive contributed the note and the $107,000, while
Imports contributed the assets of Coggin Andrews Honda (valued at
approximately $680,000), to the partnership, each receiving in
exchange a 50-percent interest in the partnership.
Under the terms of the Coggin-Andrews partnership agreement
(the partnership agreement), Imports was designated the
partnership’s managing partner.
The 1993 Restructuring Transactions
Petitioner’s board of directors determined that because (1)
the general managers wanted to own a direct interest in, and
participate in, the profits of a stand-alone partnership
dealership, and (2) Mr. Coggin wanted (as part of a succession plan
and to provide liquidity to cover estate taxes) an effective way in
which the general managers could buy him out, it would be
advantageous to change the structure of petitioner from a C
corporation to an S corporation and to operate the dealerships
through partnerships similar to the Coggin-Andrews partnership.
Consequently, during the latter part of May 1993, the board adopted
a plan to change petitioner’s structure and that of the
subsidiaries pursuant to a series of transactions (the 1993
restructuring), as outlined in a “talking points paper” prepared by
KPMG Peat Marwick (KPMG).
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