-207-
document entitled: “Accounting in Santa Monica Holdings Book”,
dated June 1, 1997, Bruno Hurstel of CDR reiterated that CLIS’s
contribution of the EBD film library to SMHC on December 10,
1996, was “without amount”. Also, consistent with its accounting
of the contribution, SMHC did not list the EBD film rights as an
asset of value on its corporate tax return for the period October
9 to December 31, 1996.152
These additional factors indicate that the EBD film rights
had very little, if any, value and were in an unsatisfactory
condition when they were transferred from CLIS to SMHC. In light
of the expert opinions and these additional factors, we conclude
that the EBD film rights had no material or consequential value
as of December 11, 1996.
Petitioner claims that the EBD film rights still have
considerable value. The record does not bear out this claim.
The Ackerman group and Troma have realized little or nothing on
the EBD film rights. SMP and SMHC distributed none of the EBD
151(...continued)
a relevant consideration in determining the value of the EBD film
library as of Dec. 11, 1996.
152 In fact, in 1997, Mr. Lerner was willing to sell a 25-
percent interest in SMP to Imperial for $5 million. Mr. Lerner
represented to Imperial that SMP had “assets totaling $49 million
(with zero liabilities) including: $29 million in film library
assets (appraised value) and $20 million in cash[.] ICII’s 25%
share of the assets would equal approximately $12.25 million, a
multiple of the proposed investment”. The $5 million sale price,
however, effectively represented 25 percent of the $20 million
cash asset with no value assigned to the film assets.
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