-24-
On July 31, 1998, CRG purchased from Starwood the remaining
39.45-percent interest (39.45-percent interest) in the 1998 Amtel
equipment for $5,814,720.10, and CRG leased the 39.45-percent
interest back to Starwood. Pursuant to promissory notes dated
July 31, 1998, CRG promised to pay Starwood $5,346,686.52 and
$53,932.54.
Also on July 31, 1998, LCL purchased the 39.45-percent
interest (subject to the lease) from CRG for $5,814,720.10.
Pursuant to promissory notes dated July 31, 1998, LCL promised to
pay CRG $5,310,887.56 and $53,832.54. No individual member of
LCL signed or guaranteed these notes, the first of which stated
it was recourse to the extent of $2.75 million and that payments
of principal and interest would be applied to the recourse
portion before the nonrecourse portion. The second note stated
it was nonrecourse.
For each of its taxable years ended in 1998 through 2001,
LCL reported as to the 1998 Amtel equipment the following amounts
of lease income, interest expense, depreciation, net “G&A”
expense and interest income, and loss:
1998 1999 2000 2001
Lease income -0- $1,987,157 2,167,807 $2,167,807
Interest expense ($156,167) (971,811) (877,785) (786,273)
Depreciation (2,948,385) (4,717,416) (2,830,450) (1,698,270)
Net G&A expense
and interest income -0- 4,047 32,922 13,815
Loss 3,104,552 3,698,023 1,507,506 302,921
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