- 5 -
Also on November 7, 1988, ACT issued separate checks of
$66,666.67 to each of its four shareholders, including
petitioner.5 Therefore, petitioner received from ACT gross
distributions aggregating $199,490.01 ($66,666.67 plus
$132,823.34). All these distributions occurred in the State of
Florida.
After the initial distribution of the sale proceeds on
November 7, 1988, the remaining payments under the purchase
agreement were distributed to ACT’s shareholders directly.6
For taxable year 1988, ACT issued petitioner a Form
1099-DIV, Statement for Recipients of Dividends and
Distributions, showing cash liquidating distributions of $80,890.
The sale of ACT’s assets to JSL on October 28, 1988,
resulted in a complete dissolution or liquidation of ACT’s
assets, and the subsequent transfers to ACT’s shareholders on
November 7, 1988, of the cash proceeds that ACT received from the
sale of its assets to JSL rendered ACT insolvent. After selling
5 Thus, Association Cable TV, Inc. (ACT), issued checks to
its four shareholders totaling $266,666.68. From worksheets in
evidence, ostensibly prepared by ACT’s accountants, it appears
that ACT allocated $13,034.93 to pay Hess’ legal expenses and
$30,000 to pay a commission. The sum of these total payments and
allocated expenses–-$309,701.61–-is slightly greater than the
$309,666.66 payment that Hess made to ACT on Nov. 7, 1988. The
seeming discrepancy is unexplained in the record.
6 The record does not indicate the exact dates or amounts of
these payments.
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