Square D Co. v. Comm'r
United States Tax Court
P was a publicly held U.S. corporation and, after its acquisition by a foreign corporation (S) through a reverse subsidiary merger, was a U.S. corporation indirectly owned by S, during the years in issue. To finance the acquisition of P, S obtained a commitment from two banks to extend loans to a to-be-organized subsidiary equal to one-half the acquisition price, not to exceed $ 1.125 billion.
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P was a publicly held U.S. corporation and, after its acquisition by a foreign corporation (S) through a reverse subsidiary merger, was a U.S. corporation indirectly owned by S, during the years in issue. To finance the acquisition of P, S obtained a commitment from two banks to extend loans to a to-be-organized subsidiary equal to one-half the acquisition price, not to exceed $ 1.125 billion. The subsidiary was created for the purpose of acquiring P. It was to use the loan proceeds to purchase P's outstanding shares, at which time it would merge into P and cease to exist. As consideration…
1Opinion of the Court
CONTENTS
FINDINGS OF FACT. 172
I. Background. 172
II. Loan Commitment and Legal Fees Arising From Acquisition of Petitioner. 172
A. The Commitment Letter . 172
B. Takeover Events and Litigation. 174
C. Commitment Letter Addendum . 175
D. The Bridge Loan. 175
E. The Term Loan . 176
F. Payment of the Commitment and Legal Fees. 177
III. Executive Compensation . 177
A. Background . 177
B. 1990 Employment Agreements . 177
C. Importance of Schneider’s Retaining Petitioner’s Key Executives . 180
D. Negotiations Between Retained Executives and Schneider Over New Employment Agreements . 180
E. 1991 Employment…
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