- 73 -
In connection with the sale of the $150 million receivable
at the end of 1997, Mr. Lerner executed a $150 million note (the
$150 million note) representing a portion of the $974 million in
receivables that Generale Bank had contributed to SMP. The note
stated that MGM Group Holdings owed CLBN $150 million.43 Mr.
Lerner backdated the note as of December 30, 1993, and signed it
as president of MGM Group Holdings; however, Mr. Lerner was not
the president, or an officer, of MGM Group Holdings on that date.
As a result of the sale of the $150 million receivable, SMP
reported the following information on its 1997 Form 1065, U.S.
Partnership Return of Income, with respect to the $150 million
receivable:
Date acquired 12/30/93
Date sold 12/19/97
Sales price $2,514,000
Cost or other basis $150,000,000
Gain or (Loss) for entire year ($147,486,000)
The $147,486,000 loss flowed through to Somerville S Trust.44
43 The note purchase agreement restated that “SMP is the
holder of two Promissory Notes issued by * * * [SMHC] in the
respective principal amounts of $815,904,188.96 and
$150,000,000”.
44 On Dec. 29, 1997, Somerville S Trust contributed all its
outstanding member interests in Somerville, LLC to SMP. This
contribution was reflected on SMP’s 1997 partnership tax return
as a $145,236,168 increase in Somerville S Trust’s capital
account in SMP.
Page: Previous 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 NextLast modified: May 25, 2011