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discussions regarding TroMetro as a vehicle for purchasing the
receivables; (3) Mr. van Merkensteijn never expected to be paid
any principal or interest on those receivables; (4) the sales
were not conducted in an ordinary manner inasmuch as Mr. van
Merkensteijn relied upon the Sage Entertainment appraisal; and
(5) the transaction had no business purpose because Mr. van
Merkensteijn did not want the receivables but wanted the stock.
Although we question Mr. van Merkensteijn’s motivations for
purchasing the SMHC receivables in 1997 and 1998, we are not
persuaded that the facts that respondent highlights establish his
proposed application of substance over form principles.
Respondent appears to rely on the March 1, 1999, capital
contribution agreement between SMHC and TroMetro. Pursuant to
this agreement, TroMetro contributed, assigned, transferred, and
conveyed to SMHC all the interests that TroMetro owned and held
in the SMHC receivables in exchange for the right to receive 20
percent of all classes of stock of SMHC (or its successor),
exercisable by TroMetro any time after March 1, 2001.
Respondent, however, fails to establish the necessary link
between Mr. van Merkensteijn’s purchase of the receivables in
1997 and 1998, and his receipt of the stock option in 1999.
These transactions took place over several years, and, in the
absence of some additional evidence, we are not persuaded that
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