-10-
reported no other asset or liability as of that date, but for a
$52 bank charge which it elected to amortize over 60 months.
As of December 31, 1996, ALSL reported for Federal income
tax purposes that its sole asset was cash of $7,298 and that it
had no liabilities. ALSL also reported for Federal income tax
purposes that it had realized a $250,000 loss for 1996. ALSL
reported that the loss was attributable to “Defeasance of Debt
Income”, “Bad Debt Losses”, and “Miscellaneous Expenses” of
$2,345,685, negative $2,588,376, and negative $7,309,
respectively.
As of December 31, 1997, ALSL reported for Federal income
tax purposes that it had no assets, liabilities, or capital.
V. ALSL Note
Pursuant to a promissory note (ALSL note) dated January 18,
1995, ALSL (under the name Seasons of Sarasota Limited Liability
Co.) promised to pay HEI “$2,500,000.00, or so much thereof as
may be advanced and outstanding pursuant to any advances made by
the Lender to the Company.” The ALSL note was drafted as a
demand note without a fixed maturity date, and it stated that it
bore interest at a rate corresponding to the applicable Federal
rate. In connection with the ALSL note, HEI transferred a total
of $2,440,684.38 to ALSL from January 18, 1995, through March 6,
1997. ALSL then transferred those funds to ALD in connection
with a January 18, 1995, nonrecourse promissory note (ALD note)
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