Document NLn2dbM2aK1vnmR8jgr0w7xy

FILE NAME Cape Asbestos CAPE DATE 1978 Jan 23 DOC CAPE179 DOCUMENT DESCRIPTION Memo to M. Meyer from A. Sarabia Re NAAC Legal - Tibbs Case Exhibit 77 ECTRONIALY 8/24/196 a en Golb Al Golb Golb 8/24/196 FILED - Sarabia 2023 American Asbestos Corporation Oct 18 12:30 the A new corporate arrangement is being made concerning entities which will sell asbestos to purchasers in the Wes- tern Hemisphere This includes Canada the United States and PM Mexico - RICHLAND The South Africa mining companies Cape Mines will own 100 of a Liechtenstein sales corporation Sales Corp Sales Corp will sell in the Western Hemisphere through an inde- pendent commission agent - COM ON North American Asbestos Corporation NAAC will be liquidated An independent corporation owned by Mr. C. G. Morgan will be organized This corporation will be the commission agent for the the sale sales it of asbestos in this area arranges for Sales Corp. It will earn commissions on PLEAS - The purpose of this corporate arrangement is to eliminate or reduce as much as possible the exposure in the United States of Cape Mines to lawsuits brought against it under theories of strict liability concerning products liability on the sale of asbestos in 203CP41759 the United sell here States Thus Sales Corp will a buy from Cape Mines and 1 If the purpose is to eliminate the risk or exposure of Cape Mines to civil actions against it for products liability on the sale of asbestos in the United States the most certain approach is to eliminate any assets by Cape Mines in the United States owned directly or A U.S. plaintiff indirectly would seek to pierce the corporate veil and go beyond Sales Corp to Cape Mines Hence the ideal way to continue to sell asbestos in the United States would be for Sales Corp to sell all asbestos f.o.b. a South Africa port transferring full title and interest there and insisting that payment be made upon embarcation Under these conditions Sales Corp would be paid for the asbestos under a letter of credit at the time it turned over the bill of lading showing loading of the asbestos aboard ship 050610 CAPE00037CAP7E0 037 E ECTRONIALY system the of sale would eliminato United States With which might be attached FILED Sales Corp there would be default judgment would - Liechtenstein 2023 Oct the 2. Anything short of that United States owned by Sales will establish some Corp. The presence assets of these assets in the United States subjects them to attachment under legal 18 12:30 proceedings which may be brought against Sales Corp. PM The greater the number of assets or the greater the value the greater the risk of this happening - If Sales Corp sells on open account those receivables RICHLAND would be subject to attachment The same would be true if a warehouse was maintained or - goods were shipped on consignment to the U. S. commission agent November 3. The comments 11 1977 to Mr. made by Mrs. Joan A. J. Penna refer Holtze in her letter of to a discussion she and COMON I had One question concerned the U.S. federal income tax liability PLEAS of having Sales Corp goods in New York sell f.o.b. New York i.e. pass title to the - . The other question had to do with the U.S. federal income tax consequences of Sales Corp maintaining a warehouse somewhere in the United States Section 882 of the Internal Revenue Code Code the 20 3CP40 1 provides for the taxation of effectively connected income of a foreign corporation Section 881 provides for the taxation of other income such as interest dividends etc. Section 861 provides that if title to personal property passes from titleporation to the purchaser in the United States source income foreign cor- selling U.Se that constitutes U.Se stored and With respect to maintaining a warehouse where asbestos could be shipped from there to U.S. customers maintaining a warehouse assumes that the goods stored there would continue to be the property of Sales Corp. These would constitute assets within the United States which could be attached as described above Upon the sale of the goods to the U.S. customer there would be U.S. source income subject to taxation under the Code Even if the warehouse were to be maintained in a foreign trade zone or free trade zone in the United States under Revenue Ruling 76-161 income earned by Sales Corp from the sale of the asbestos would be subject to U.S. 050611 CAPE000378 CAPE000378 topes 1 pas ECTRONICALLY ECTRONICALLY ECTRONICALLY ECTRONICAL Y ECTRONICAL Y ECTRONICALLY income tax Further the receivables from such EECCTTRROONNIICCAALLLLYY ECTRONICALLY be subject to attachment by any would plaintiff ECTRONICALLY FILED FILED If the goods were to be sold on consignment the net FILED FILED result would be the same namely either there would be goods owned by Sales Corp or there would be a receivable payable to 22002233 Sales Corp arising from the sale of those goods In either in- 2023 2023 stance said assets may be attached by potential plaintiffs Oct Oct 18 12:30 12:30 12:30 PM PM RICHLAND RICHLAND RICHLAND RICHLAND RICHLAND RICHLAND RICHLAND COMMON COMMON COMMON COMMON COMMON COMMON PLEAS PLEAS PLEAS PLEAS PLEAS CASE CASE CASE CASE # 2023CP4001759 2023CP4001759 2023CP4001759 2023CP4001759 2023CP4001759 2023CP4001759 2023CP4001759 2023CP4001759 2023CP40 1759 2023CP4001759 2023CP4001759 2023CP4001759 klk Attachments CAPE000379