Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 324

                                       - 91 -                                         
               On its partnership tax return for the taxable year ended               
          December 31, 1997, SMP reported the sale of the additional 14.65-           
          percent interest in Corona to Imperial as follows:                          
                         $216,750  Sales price                                        
                         11,864,117  Basis                                            
                    (11,647,367) Short-term capital loss                              
          This $11,647,367 loss flowed through to the Somerville S Trust              
          and then through to Mr. Ackerman, who claimed it on his tax                 
          return.                                                                     
               5.  Sale of the $79 Million Receivable                                 
               On December 29, 1997, Mr. Lerner, on behalf of Corona, and             
          Mr. van Merkensteijn, on behalf of TroMetro, executed a note                
          purchase agreement providing for Corona’s sale of the $79 million           
          receivable to TroMetro.  According to this agreement, the                   
          purchase price to be paid by TroMetro was $1,144,000, to consist            
          of $120,000 cash and a $1,024,000 promissory note payable by                
          TroMetro to Corona.62                                                       
               On December 29, 1997, the $120,000 cash amount was paid by             
          wire transfer.  Mr. van Merkensteijn, on behalf of TroMetro,                
          executed a $1,024,000 promissory note dated December 29, 1997               




               62 In arriving at a purchase price for the $79 million                 
          receivable, Mr. van Merkensteijn testified that he used the same            
          pricing formula as in TroMetro’s purchases of the $150 million              
          and $81 million receivables, and he similarly relied on the Sage            
          Entertainment appraisal of SMHC’s film assets.                              





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