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there was a "Supply Agreement between this corporation [JAI] and
Kolonaki, this corporation's parent".
In December 1989, Georgiou set up the George Georgiou Living
Trust and transferred personal assets into it. Included in the
assets were 23,400 shares of JAI stock. The September 15, 1990,
Minutes of the Regular Meeting of the Shareholder of JAI listed
as present at the meeting: "GEORGE GEORGIOU, Trustee of the
George Georgiou Living Trust, Established December 5, 1989--
23,400 shares."
The September 30, 1990, Meeting Minutes of the Board of
Directors of JAI that were given to the IRS agent during the
audit no longer named Georgiou as trustee of the JAI stock.
These minutes listed Georgiou as present and resolved: "it would
be in the best interest of the corporation to elect to file
consolidated tax returns with KOLONAKI, a California corporation
which is the beneficial owner of all the issued and outstanding
shares of this corporation."
Three sets of promissory notes from JAI to Georgiou were
prepared. The notes represented the loans Georgiou made to JAI
as set forth in the JAI minutes. The notes were for loans of
$400,000, $536,000, and $16,100. The notes were dated 1988 and
1989. Some of the notes contained an assignment clause that
stated:
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