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Upon purchase of the stock in Quintron, QTN was merged into
Quintron, and Quintron thereafter remained as the surviving
corporation and was controlled by IPG.2 A major benefit to IPG
and to QTN of retaining Quintron as the surviving corporation
after the merger between Quintron and QTN was that Quintron had
significant taxable income in 1993 and prior years against which
claimed carryback losses (arising from the claimed ordinary
deductions relating to the transactions at issue herein) could be
applied in an attempt to produce large tax refunds for the
successor corporation to Quintron (and even though, as stated,
QTN in prior years had been a dormant shell corporation).
By prearrangement and simultaneously with the above stock
purchase transaction, Quintron (the stock of which was now
controlled by IPG) sold to Loral the assets of Quintron.3
Quintron’s sale price for the assets was approximately $20.5
million in cash, plus the assumption by Loral of certain
liabilities of Quintron. Expenses of $892,943 were incurred by
QTN and Quintron in connection with the stock purchase and asset
sale transactions.
In spite of the transactions involving the purchase of its
stock by QTN, QTN’s merger with Quintron, and the sale of assets
2 After the merger of QTN into Quintron, IPG owned directly or
indirectly more than 75 percent of the stock in Quintron.
3 The parties do not explain why the only assets of Quintron
that were sold to Loral consisted of $4.6 million in goodwill,
$16.5 million in trade receivables, and $85,000 in other assets.
Presumably, Quintron had operating assets that were the basis of
Quintron’s manufacturing and sales business. What happened to
such operating assets is not explained in the record.
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