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Permission from the automobile manufacturers associated with
the particular dealerships had to be obtained before there could be
a change in the ownership structure of the dealerships.
Consequently, on or around May 27, 1993, petitioner sent letters to
each of the automobile manufacturers notifying them of the proposed
changes and requested their approval. Each letter stated, in part:
After serious consideration of the present and
future tax laws, the shareholders * * * are in the
process of forming a Florida limited partnership * * *
* * * * * * *
It is our objective to complete the transfer of
* * * [the dealership] operation to * * * [the newly
formed partnership] on or before June 21, 1993.
Completion of the transfer by that date is critical to us
for tax reasons.
Each automobile manufacturer approved the ownership change.
The first step of the 1993 restructuring was the establishment
of six new corporations. On May 27, 1993, articles of
incorporation were filed for CP-GMC Motor Corp., CH Motor Corp., CN
Motor Corp., CA Motor Corp., CO Motor Corp., and CFP Motor Corp.
(collectively, the newly formed S corporations), and each
corporation elected S corporation status, effective May 27, 1993.
The corporations were incorporated for the purpose of being general
partners in limited partnerships that would operate the
dealerships. Mr. Coggin and the O’Steens were the sole
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