Merrill Lynch & Co., Inc. & Subsidiaries - Page 39




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          diligence review.  Among other concessions, petitioner                      
          represented to GATX that to the best of petitioner’s knowledge,             
          as of the date of the closing, the schedules in the contract were           
          the actual status of the individual leases and, to the extent               
          they were not, there would be a postclosing adjustment to                   
          accurately reflect the discrepancies.                                       
               During the negotiations, GATX requested that ML Vessel                 
          Leasing Corporation (Vessel Leasing), a wholly owned subsidiary             
          of ML Capital Resources, not be included in the ML Capital                  
          Resources portfolio because GATX/BCE could not own the assets in            
          Vessel Leasing due to restrictions under Federal laws.29  By                
          resolution dated June 10, 1987, the respective boards of ML                 
          Capital Resources and ML Asset Management approved the sale of              
          all the stock of Vessel Leasing to ML Asset Management.  On that            
          same date, ML Capital Resources and ML Asset Management entered             
          into a stock purchase agreement with respect to Vessel Leasing’s            
          stock.  The purchase price for the stock was $367,481.  The sale            
          closed on June 10, 1987.  Immediately before its purchase of                
          Vessel Leasing, ML Asset Management had accumulated earnings and            
          profits that exceeded the purchase price.  This is the eighth               
          cross-chain sale at issue for the taxable year ended December 25,           




               29BCE was a Canadian corporation and could not legally own a           
          vessel that had been financed by the U.S. Government.                       





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