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had was materials in the molds." Petitioners did not have the
assets, including the boat molds, appraised or valued at the time
of the exchange. However, on Riviera's Form 1120, U.S.
Corporation Income Tax Return, for the year ending September 30,
1980, Riviera's assets were valued at $135,731.
Petitioners claim that Riviera was liquidated on October 31,
1979, the date they retained the collateral. The parties have
stipulated that Riviera conducted no business from approximately
September 30, 1980 to September 30, 1990. However, Federal
corporate income tax returns continued to be filed for Riviera up
until the year ending September 30, 1990. For the years ending
September 30, 1980, September 30, 1981, September 30, 1982,
September 30, 1983, and September 30, 1984, Riviera continued to
claim depreciation deductions for office equipment on the
corporate tax returns. Petitioner husband claimed the corporate
tax returns continued to be filed for the following reason:
We didn't file in each year, Your Honor. My attention
was -- as we were shut down and that was the end of it,
and then we didn't file any income tax returns after we
shut down.
And then IRS wrote us a letter, so we went ahead
and the accountant took the last return and filed it
and sent them in. And at that time we thought maybe
things could turn around and we could maybe start back
up, which never happened. Things were improving, but
it still didn't work out that way.
Riviera's Federal corporate income tax return for the year
ending September 30, 1980, reflects the sum of $78,541 as
shareholder loans from petitioners to Riviera, and $30,000 as
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