- 4 - of additional paid-in capital reflected on petitioner's balance sheet dated November 1, 1985, was $332,373. The $332,373 net equity on the books included a charge of $179,000 for deferred income taxes attributable to Wagner & Wagner's being an accrual basis taxpayer and petitioner's being a cash basis taxpayer. Additionally, the financial statements show a capital contribution of $2,000 for the common stock. Initially, Clifford and Dennis each owned 1,000 shares (50 percent) of petitioner's stock. Clifford died on April 15, 1986. In August 1986, petitioner redeemed 1,000 shares of its stock for $157,883 payable to Evelyn in monthly installments of $2,000 with interest at a rate of 9 percent per annum. At the same time, Dennis transferred 250 of his 1,000 shares of petitioner's stock (25 percent of the outstanding stock) to Curtis, and Evelyn gave each son a 25-percent interest in Wagner & Wagner. From August 1986 through the years at issue, Dennis owned 75 percent of petitioner and Wagner & Wagner, and Curtis owned 25 percent. On January 1, 1988, Wagner & Wagner transferred a substantial portion of its net assets (assets of $703,257 and liabilities of $207,106) to petitioner, and petitioner issued to Wagner & Wagner a debenture of $496,151 due January 1, 1993. The debenture bore interest at an annual rate of 8 percent and was recorded as long-term debt on petitioner's books.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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