Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 323

                                       - 90 -                                         
          had acquired a total interest in Corona of 93.85 percent.                   
          Imperial paid $36,700 in cash for the additional interest and               
          increased the amount of its promissory note to SMP by $180,050              
          for a total note payable of $1,220,050 (the $1,220,050 note).               
          Imperial made no payments of principal or interest on this                  
          note.61                                                                     
               On December 23, 1997, the members of Corona executed an                
          amendment to the amended and restated Corona LLC agreement,                 
          providing for Imperial’s purchase of the 14.65-percent additional           
          interest in Corona.  According to this amendment, Corona’s                  
          capital accounts were restated as follows:                                  


                         Capital account      Percentage interest                     
               Imperial       $1,469,000          93.85                               
               SMP            81,000                   5.15                           
               Mr. Lerner     5,000                0.33                               
               Peridon Corp.        10,000                0.67                        
               Total          $1,565,000               100.00                         
               On its partnership tax return for the period December 16 to            
          31, 1997, Corona reported Imperial’s additional purchase as an              
          $11,864,117 capital reduction by SMP and an $11,864,117 capital             
          contribution by Imperial.                                                   



               61 Pursuant to the $1,220,050 note, interest was to accrue             
          at a rate of 8 percent per annum and was payable semiannually on            
          June 15 and December 15 of each year.  Imperial agreed to pay the           
          outstanding principal amount of the $1,220,050 note together with           
          accrued and unpaid interest thereon on Dec. 15, 2002.                       





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