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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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