- 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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