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On March 25, 1996, Mr. Reiter drafted two letters which gave
notice to the State of Pennsylvania that a sale by and between
Self Oil and petitioner was scheduled for April 5, 1996. On or
about April 15, 1996, Self Oil conveyed substantially all its
assets to petitioner pursuant to an asset purchase agreement
(agreement).3 The purchase price was listed in the agreement as
$680,000. According to schedule A attached to the agreement, the
purchase price was allocated to the assets being purchased as
follows:
Item Allocation
Vehicles:
Vans $45,200
Trucks 21,800
Inventory 220,620
Customer list 374,564
Office equipment 15,000
Goodwill 2,816
According to the agreement, the consideration for the conveyance
took the form of petitioner’s assumption of various debts of Self
Oil: (1) Outstanding loans to Mr. Self, Sr., and his wife
totaling $445,419;4 (2) Self Oil’s forfeiture and fine
3However, according to the agreement, the closing was to
take place on Apr. 8, 1996.
4During the years preceding the conveyance, Mr. Self, Sr.,
and his wife had advanced their personal funds to Self Oil so
that it could meet its financial needs, the amounts of which were
recorded on the corporate books and records as “loans from
stockholder”; i.e., unsecured long-term liabilities. When Self
Oil conveyed its assets to petitioner, the outstanding balance
owed to Mr. Self, Sr., and his wife was $445,419.
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