- 89 - distribution from Corona to SMP. As a result of Imperial’s purchase of SMP’s membership interest in Corona, Corona’s capital accounts and percentage interests were restated as follows: Capital Account Percentage Interest Imperial $1,240,000 79.20% SMP 310,000 19.80 Mr. Lerner 5,000 0.33 Peridon Corp. 10,000 0.67 Total $1,565,000 100.00 On its November 5 to December 15, 1997, partnership tax return, Corona reported Imperial’s initial purchase of SMP’s interest as a $64,130,364 capital reduction by SMP and a $64,130,364 capital contribution by Imperial. Corona reported these amounts at tax values, not accounting book values. On its tax return for the taxable year ended December 31, 1997, SMP reported the sale of its interest in Corona to Imperial as follows: $1,252,000 Sales price 63,489,061 Basis (62,237,061) Long-term capital loss The $62,237,061 loss that SMP reported flowed through to Somerville S Trust and then through to Mr. Ackerman, who claimed it on his tax return. 4. Additional Purchase of SMP’s Interest in Corona On December 23, 1997, Imperial purchased from SMP an additional 14.65-percent interest in Corona pursuant to an amendment to purchase agreement. With this purchase, ImperialPage: Previous 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 Next
Last modified: May 25, 2011