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superintendents. Petitioner then moved into a 784-square-foot
office. In 1990, petitioner moved into a 10,000-square-foot
office. At that time, petitioner had about 39 employees. In
1992, petitioner had 84 employees. In 1994, petitioner moved
into a 15,000-square-foot office.
D. Choate's Role in Petitioner's Operations
1. Personal Investment of Time and Money
Choate worked only for petitioner after he incorporated it.
He worked 16 hours a day, 7 days a week for the first 3 years,
including the year in issue. Choate took one vacation, lasting 4
days, in the first 3 years after he incorporated petitioner.
Choate lent all of his personal savings (about $450,000) to
petitioner to help petitioner get surety bonds required to bid
large jobs. Choate reported $19,500 in interest income from
petitioner for 1991, $19,500 for 1992, and $44,846 for 1993.
Choate had contributed $402,475 in capital to petitioner by June
30, 1992. Choate lent petitioner $50,000 on June 27, 1992,
$100,000 on August 9, 1992, and $350,000 on September 10, 1992,
at an interest rate of 13 percent; and $493,868.78 on December
31, 1992, at an interest rate of 5 percent.
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