Merrill Lynch & Co., Inc. & Subsidiaries - Page 24




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               G.  ML Leasing Stock Purchase Agreement                                
               Effective September 19, 1986, Merrill Parent, ML Capital               
          Resources, ML Leasing, and Inspiration executed an agreement for            
          the purchase and sale of the stock of ML Leasing (ML Leasing                
          stock purchase agreement).  The ML Leasing stock purchase                   
          agreement was amended as of October 31, 1986, to reflect further            
          negotiations on certain matters.  The purchase price was                    
          $129,445,843, payable in cash at closing, subject to certain                
          postclosing adjustments.  Pursuant to the ML Leasing stock                  
          purchase agreement, the purchase price subsequently was adjusted            
          based on residual value appraisals for certain leases.  The sale            
          of ML Leasing closed on October 31, 1986.                                   
          II.  1987 Sale of ML Capital Resources                                      
               At the beginning of petitioner’s TYE 1987, ML Capital                  
          Resources was a wholly owned subsidiary of Merrill Parent.19  ML            
          Capital Resources was engaged in the business of arranging                  
          equipment leasing transactions between third parties and also               
          owned various types of equipment and other tangible personal                
          property, which it leased to third parties.  ML Capital                     
          Resources’ business focused on small business leases.  It was               
          also a partner in certain limited partnerships that held                    


               19By resolution dated Apr. 8, 1987, the board of directors             
          of Merrill Parent approved the formation of a newly organized               
          corporation, Merrill Lynch Consumer Markets Holdings, Inc.                  
          (Consumer Markets or MLCMH), and the contribution of all the                
          capital stock of ML Capital Resources to Consumer Markets.                  





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