- 33 -
form. Hence, the preponderance supports petitioners’ position
with regard to the $6 million, and this amount is properly
included in basis in Alofs and Target.
2. $500,000 loan and $400,000 loan
Two additional amounts labeled as “loans” in the parties’
stipulations are among the items claimed by petitioners to have
resulted in accretions to basis. These include $500,000
characterized as a “Loan from selling shareholders backed by CD
from taxpayer” and $400,000 designated as a “Loan from Excellence
to Alofs”. Petitioners’ contentions with respect to these
amounts can only be described as murky at best. Petitioners on
brief incorporate in a listing of various forms of consideration
exchanged in the LBO transaction the statement that, after
contribution of his Excellence holdings:
Petitioner purchased with $7,160,000 in cash sellers
remaining shares in Alofs and Target, with Alofs and
Target assuming a $500,000 seller note backed by a
Certificate of Deposit of $400,000 to be released to
Petitioner upon pay down of the $500,000 seller note,
plus $196,000 in Excellence dividends payable by Alofs
to Petitioner upon demand * * *
Mr. Gleason also made a number of convoluted references to
$500,000 and $400,000 amounts in his testimony at trial, likewise
suggesting some connection between the two but leaving the Court
with no clear understanding of the relationship or the intended
versus actual circumstances. For example, he stated at one
point: “As the note was paid down, that I would proportionally
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011