- 9 - would be about $4.3 million. Mr. Dunne also requested that FRC continue its practice of depositing Mr. Dunne’s estimated tax liability directly with respondent. He did not believe that this would be a problem because FRC had over $3 million in cash. Mr. Dunne signed this letter as “Co-Owner and Chairman of the Board” of FRC. On September 21, 1998, FRC filed a Form 1120S for 1997 and attached Schedules K-1 for Mr. Dunne and Mr. Marcus. The Schedules K-1 reported Mr. Dunne’s and Mr. Marcus’s shareholder percentages for 1997 to be 50 percent each and reported their pro rata shares of FRC’s income and loss as $2,116,600 of ordinary income, $27,504 of interest income, and $1,953 of capital loss. FRC sent Mr. Dunne a Schedule K-1 for 1997 identical to the Schedule K-1 it submitted to respondent. The Arbitration Award In October of 1997, Mr. Marcus offered to pay Mr. Dunne $2.2 million in full satisfaction of all payments required by the settlement agreement. Mr. Dunne responded with a $2.6 million counteroffer, which he withdrew. Mr. Dunne decided to let the arbitrator decide on the award because he thought he was entitled to receive about $4.9 million under the settlement agreement. The arbitrator entered an arbitration award (the arbitration award) on June 8, 1998. The arbitrator determined that Mr. Dunne’s share of the halon contract was $511,267.54, which wasPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 NextLast modified: March 27, 2008