- 12 - gave petitioner a $1.5 million check drawn on Rich Foods’ check- ing account. During the year at issue in August 1999, SUPERVALU, Inc. (SUPERVALU), acquired Rich Foods. SUPERVALU recorded the $1.5 million advanced to petitioner in SUPERVALU’s fixed asset ledger as a supply rebate that was to be amortized over six years in monthly installments of $19,230.77. Petitioner recorded the April 15, 1999 note in its books and records as a long-term note payable. Petitioner expended $750,000 of the $1.5 million at issue on capital improvements and temporarily invested the balance in certificates of deposit (CDs). Petitioner pledged the CDs as collateral for a $960,000 loan from PNC Bank. Petitioner used the $960,000 in PNC Bank loan proceeds for capital improvements. During the latter part of the year at issue, Mr. Karns concluded that it would be desirable to relocate one of peti- tioner’s stores. As a result, he entered into negotiations to lease a new site for that store. The prospective lessor of that site refused to lease it to petitioner without a guaranty of petitioner’s lease obligations. At all relevant times, SUPERVALU agreed to act from time to time as a guarantor of a customer’s lease obligations where SUPERVALU concluded that to do so would serve SUPERVALU’s busi- ness interests. Around January 25, 2000, SUPERVALU guaranteedPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011