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Joyce P. Caracci, Michael Caracci, and Christina C. McQuillen.
Sec. 4958(f)(1)(B). Sta-Home Health Agency of Carthage, Inc.,
Sta-Home Health Agency of Greenwood, Inc., and Sta-Home Health
Agency of Jackson, Inc., are disqualified persons because they
are entities that are 35-percent controlled by disqualified
persons; in fact, members of the Caracci family own 100 percent
of the Sta-Home for-profit entities’ voting stock. Sec.
4958(f)(1)(C). Accordingly, petitioners are subject to excess
benefit taxes under section 4958.
Because we have decided the value of the Sta-Home tax-exempt
entities’ assets on the basis of a revenue multiple, it is
appropriate to ascribe the excess benefit to each of the Sta-Home
for-profit entities in proportion to the amounts the 1995
revenues of their respective predecessors bore to the total
revenue. This produces the following results:
Entity Percentage Benefit
Sta-Home Health Agency 42.1 $2,173,682
of Carthage, Inc.
Sta-Home Health Agency 30.1 1,554,105
of Greenwood, Inc.
Sta-Home Health Agency 27.8 1,435,353
of Jackson, Inc.
Because each of the three entities acquired or assumed its
predecessor’s assets and liabilities, as opposed to acquiring its
predecessor’s stock, we see no basis to apply a minority discount
to the value of the excess benefits each has received. Nor for
that reason is an application of a minority discount appropriate
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