T.C. Memo. 2006-174
UNITED STATES TAX COURT
JOHN S. AND CHRISTOBEL D. RENDALL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16337-04. Filed August 21, 2006.
P husband (PH) was CEO and chairman of the board
of SE Corp., which had developed a process for
recovering synthetic crude oil and other minerals from
oil sands. In March 1997, as part of an effort to
finance completion of an oil recovery plant in Canada
using SE Corp.’s technology, PH lent SE Corp. $2
million from funds borrowed from Merrill Lynch (ML)
through his ML margin account. PH pledged a portion of
his SE Corp. common stock as security for loans to him
through that account. In May 1997, ML demanded
repayment of PH’s margin account loans and, upon
default by PH, ML sold a portion of the pledged shares
and returned the balance to PH. In June and July 1997,
SE Corp. filed petitions in the U.S. and Canada for
reorganization in bankruptcy. In September 1997, SE
Corp. stock was delisted by NASDAQ and thereafter was
listed in the “pink sheets” and traded over the
counter. Although forced to sell its Canadian
Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011