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3. Intent Corporation
Intent, an S corporation on the accrual basis with a fiscal
year ending March 31, was formed in 1972. During fiscal years
1988 and 1989, Wise held 31.25 percent and Eicher held 68.75
percent of Intent's income, credits, and deductions.
4. WRI Corporation
WRI, an S corporation on the accrual basis with a fiscal
year ending July 31, was formed in 1973. Wise was president of
WRI at all times relevant here. WRI initially engaged in real
estate brokerage activities, but was essentially inactive from
1978 to 1985. WRI owned and operated a resort near Kissimmee,
Florida, during its fiscal year 1988. Wise and Eicher each were
entitled to 50 percent of WRI's income, credits, and deductions
during WRI's fiscal years 1988 and 1989.
C. Mortgages and Loans
1. The Hersco Mortgage and HMC's Loan to WRI
a. WRI's Purchase of Land From Hersco
Hersco owned 35 acres of unimproved land in Osceola County,
Florida, which it bought for about $134,000 in 1973. In 1984, an
independent appraiser valued the land at $1,468,000. On August
14, 1984, Hersco sold the land to WRI for $1,468,000. At the
closing, WRI paid Hersco $88,000 in cash and gave Hersco a
$1,380,000 mortgage on the land (the Hersco mortgage). Hersco
sold the land to WRI so Wise and Eicher could develop it in
corporate form and thereby limit their personal liability.
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