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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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