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Asset Management had accumulated earnings and profits that
exceeded the purchase price. This is the sixth cross-chain sale
at issue for the taxable year ended December 25, 1987. The
parties agree that this cross-chain sale was a section 304
transaction.
3. Leasing Equipment
By resolutions dated April 3, 1987, the respective boards of
ML Capital Resources and Merrill Lynch, Pierce, Fenner & Smith,
Inc. (MLPFS), a first-tier wholly owned subsidiary of Merrill
Parent, approved the sale of all the stock of ML Leasing
Equipment Corp. (Leasing Equipment or MLLE), a wholly owned
subsidiary of ML Capital Resources, to MLPFS.25 ML Capital
Resources and MLPFS entered into a stock purchase agreement dated
April 3, 1987. The purchase price for Leasing Equipment’s stock
was $119,819,690. The sale closed on April 3, 1987. Immediately
before its purchase of Leasing Equipment, MLPFS had accumulated
24(...continued)
of ML Interfunding as of Mar. 30, 1987, was $181,080,000. Based
on such appraisal, ML Asset Management and Consumer Markets, as
assignee of ML Capital Resources’ rights under the ML
Interfunding stock purchase agreement, agreed that ML Asset
Management would pay Consumer Markets $26,413,365 as the final
payment of the purchase price for the ML Interfunding stock,
which was the difference between $181,080,000 and the net
consideration paid at closing of $154,666,635.
25On Apr. 2, 1987, ML Capital Resources contributed the
stock of MLL Corporate Partners, Inc., a subsidiary of ML Capital
Resources engaged in nonleasing activities, to Leasing Equipment.
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