-25-
The portions of these losses allocated to HBW’s 99-percent
ownership interest were $3,073,507, $3,661,043, $1,492,431, and
$299,892, respectively.
D. 1999 Blisk Equipment
Relational Funding Corp. (RFC) is a corporation that is
unaffiliated with any Hubert company. On April 30, 1999, RFC
sold (subject to a lease) a Lear Precision ECM 1999 blisk machine
(1999 blisk equipment) to LCL for $2,950,382.86. At that time,
the 1999 blisk equipment was leased to General Electric Aircraft
Engines. LCL paid $133,000 towards the purchase, issued to RFC a
$30,742 short-term note, assumed a $403,505.60 long-term note of
RFC, and assumed RFC*s position with respect to lender liens on
the 1999 blisk equipment.
For each of its taxable years ended in 1999 through 2001,
LCL reported as to the 1999 blisk equipment the following amounts
of lease income, interest expense, depreciation, “G&A” expense
and interest income, and loss:
1999 2000 2001
Lease income $108,296 $433,185 $433,185
Interest expense (35,449) (172,353) (154,497)
Depreciation (421,484) (722,543) (516,022)
Net G&A expense
and interest income 221 6,579 2,761
Loss 348,416 455,132 234,573
The portions of these losses allocated to HBW’s 99-percent
ownership interest were $344,932, $440,672, and $232,227,
respectively.
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