- 47 -
and Mr. Curtis’s indirect interest in Stone Ends, acquired before
the closing of Stone Ends’ purchase of the Manchester property,26
show that they (and Mr. Winn in particular) maintained a
“continuing economic interest” in the Manchester property after
it was purchased by Stone Ends, which distinguishes this case
from both Chisholm v. Commissioner, 79 F.2d 14 (2d Cir. 1935),
and Hobby v. Commissioner, 2 T.C. 980 (1943). Respondent also
argues that Mr. Winn “was apparently confident that the sale of
the [Manchester] property * * * would occur” (and that,
therefore, Countryside would receive the funds needed to repay
the CB&T loans) when he executed the various guaranties of
Countryside’s and MP’s debt to CB&T in 2000. Respondent
concludes: “Further discovery on whether there was an agreement
regarding the sale of * * * [the Manchester property], before the
date of the purchase agreement, should be permitted.”
We do not agree that Mr. Winn’s and Mr. Curtis’s “continuing
economic interest” in the Manchester property after the 2001
purchase of the property by Stone Ends in any way compromises the
status of Chisholm and Hobby as supporting authorities for
25(...continued)
respect to which Federal Home Loan Mortgage Corp. (FHLMC) was
made the beneficiary. FHLMC required the letter of credit in
connection with CB&T’s $8.55 million loan to Countryside in order
to protect its position as party to a credit enhancement
agreement with Countryside.
26 In order to provide Stone Ends with sufficient capital
to consummate its purchase of the Manchester property from
Countryside, an L.L.C. that was 98 percent owned by Mr. Winn and
Mr. Curtis family trusts acquired a 24.22-percent membership
interest in Stone Ends on Mar. 28, 2001, in exchange for a
capital contribution of $2,337,703.
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Last modified: March 27, 2008