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0607013 Informal Interpretation
us-ftc-hsr-informal-interpretations-d892050ea10dddd2671869da802898b30607013 Informal InterpretationGuidance
Date
Rule
801.1(b)
Response/Comments
Use the size of the parties' opening capital accounts if this is in connection with the formation. If it is in connection with an acquisition by an existing non-corporate entity, use its most recent balance sheet, or if it has not prepared one, a pro-forma using any acceptable accounting methodology.
Question
From: (redacted)
Sent: Tuesday, July 25, 2006 7:11 PM
To: Verne, B. Michael
Subject: Control of Unincorporated Entity
DearMike:
Ina situation where the governing agreement of a non-corporate entity does notdesignate a fixed percentage of profits or assets upon dissolution, weunderstand that "control" of the entity would be determined byapplying the formula to the total assets of the entity at the time ofacquisition as if the entity were being dissolved at that time. 70 Fed.Reg. 11,504 (318/2005).
Toapply this formula, would one assume a hypothetical sale of the JV to a thirdparty and apply the formula to the sale proceeds? If so, what assumed salevalue should be used?
Or,does the 3/812005 release in effect just tell us to review the size of the parties'opening capital accounts under partnership accounting rules to determinecontrol?
Iask this question because some dissolution formulae require different profitallocations, depending on the source of the income, prior to return of capitalaccounts.
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