Merrill Lynch & Co., Inc. & Subsidiaries - Page 40




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          1987.  The parties agree that this cross-chain sale was a section           
          304 transaction.                                                            
               H.  Sale of ML Capital Resources Is Finalized                          
               By resolution dated June 18, 1987,  ML Capital Resources’              
          board of directors authorized the sale of its stock to GATX/BCE.            
          As of June 25, 1987, Merrill Parent, Consumer Markets, ML Capital           
          Resources, and GATX/BCE entered into an agreement for the                   
          purchase and sale of stock of ML Capital Resources for a fixed              
          cash consideration of $50,447,996, payable at closing (subject to           
          adjustments for working capital and certain residual proceeds),             
          and a contingent cash payment based on the realization of certain           
          residual values due on or before January 1, 1995, but not to                
          exceed $15 million.  The sale closed on June 26, 1987.  Merrill             
          Parent represented to GATX/BCE that, to the best of its records             
          and knowledge, as of the date of the closing the schedules                  
          attached to the contract would contain accurate information about           
          each of the individual leases.  To the extent that the schedules            
          did not contain accurate information, there would be postclosing            
          adjustments.  With one exception, Merrill Parent did not                    
          guarantee the obligations of the lessees.  Merrill Parent also              
          did not guarantee the residual values of any leases.                        
               On its consolidated Federal income tax return for the                  
          taxable year ended December 25, 1987, petitioner claimed a long-            
          term capital loss in the amount of $466,985,176 from the sale of            






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