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result of advice received by Mr. Schoenecker that restructuring
of BI to transfer the real estate it owned to Mr. Schoenecker was
advisable.
From the time of its incorporation in 1978, no dividends
were declared by GSI until its fiscal year 1990. On May 18,
1990, GSI transferred and paid dividends in cash to Larry of
$85,097.96 and to Mr. Schoenecker of $4,915,899.25, and
transferred real estate located at 7625 Bush Lake Road valued at
$1,950,000 to Mr. Schoenecker and real estate located at 7630
Bush Lake Road valued at $2,400,000 to Mr. Schoenecker. The real
estate transferred by GSI to Mr. Schoenecker was the property in
which the business offices of GSI and BI were located. The cash
dividend from GSI to Mr. Schoenecker was paid out of cash
dividends from BI to GSI and enabled Mr. Schoenecker to have
readily available funds with which to pay the taxes resulting
from the dividend paid to him in real estate.
BI is engaged, and has been since its incorporation, in the
business of business incentive awards, which awards are primarily
merchandise and travel given by the clients of BI to their
customers in return for stamps or certificates and as promotions
by BI's clients. Approximately 60 percent of the revenues of BI
in 1990 came from its incentive awards activities. However, BI
is also engaged in communication, media, direct mail, print,
theater, and video work, and approximately 16 percent of its
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Last modified: May 25, 2011