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Factual Circumstances
In light of the foregoing principles, we turn to the facts
before us. From 1986 through most of 1989, shares of CIBV were
distributed as follows (with intermediate controlled entities
omitted for purposes of simplification):
Mario F. Kassar (a United States resident) 24.95 percent
Kassar Family Trust (a Jersey entity) 25.05 percent
Andrew G. Vajna (a United States resident) 24.95 percent
Mong Family Trust (a Hong Kong entity) 25.05 percent
(Mr. Mong Hin Yan was the father of petitioner Cecilia M.
Vajna.)
CIBV, in turn, owned approximately 75 percent of Carolco
Pictures, Inc. (CPI), a Delaware corporation involved in the
business of international motion picture distribution.
Then, in late 1989, it was decided to effect a buyout
transaction whereby Mr. Kassar and the Kassar Family Trust would
obtain control of CPI. In preparation therefor, the CIBV shares
controlled by Mr. Kassar and the Kassar Family Trust were
transferred to Beheer-en Beleggingsmaatschappij Petina B.V.
(Petina), a Netherlands corporation also controlled by Mr. Kassar
and the Kassar Family Trust. As originally contemplated, the
buyout was then to proceed as follows. On or before December 29,
1989, CIBV was to sell all of its CPI stock to Petina and third
parties and was to receive in return monetary compensation (cash
and notes) in excess of $100 million plus the 50 percent of CIBV
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