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to the Brussels Leaseback, the Atrium Sublease, and the Trust
Fund, petitioner transferred to B.V. Handelsmaatschappij
Wildervank (Wildervank), a Dutch bank based in the Netherlands,
petitioner’s interests in the Brussels Leaseback and in the Trust
Fund, $400,000 in cash, and 10 shares of stock in Cove
Enterprises, Inc. (Cove), an unrelated corporation. Petitioner’s
interest in the RVC was not transferred to Wildervank and was
retained by petitioner.
In exchange for the above transfers to Wildervank,
Wildervank assumed all of petitioner’s purported lease
obligations relating to the Brussels Leaseback and the Trust
Fund.
On September 30, 1993, the balance of the funds held in
trust by the Trust Fund was approximately $22 million.
On or about November 30, 1996, ABN informed petitioner that
no payment would be made to petitioner under the RVC. Petitioner
made no effort to establish the value of the leased equipment or
otherwise to question why no payment would be made to it under
the RVC. On October 1, 1997, petitioner was liquidated and went
out of business.
On its 1994 Federal corporation income tax return
(reflecting a taxable year ending January 31, 1994), petitioner
reported income in the amount of approximately $11 million
relating to the sale of assets to Loral, and petitioner claimed
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