Leo N. Levitt and Ruth G. Levitt - Page 5

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          in issue, Ruth Levitt drove new cars and had a comfortable                  
          standard of living.  Petitioners took regular vacations to Las              
          Vegas and Florida from 1963 to 1970.                                        
               2.   Welev of Pinellas County, Inc.                                    
               In 1959, a Brooklyn lawyer named Erwin Weiss (Weiss), who              
          had helped organize Resyn, recommended that petitioners buy 41              
          acres of land in St. Petersburg, Florida.  Petitioner, Ruth                 
          Levitt, Fred Berger (Berger), a St. Petersburg realtor who knew             
          Weiss, and Weiss organized a group called Welev of Pinellas                 
          County (Welev) to hold the 41 acres.  Each owned a one-fourth               
          interest in Welev.  In 1959, petitioner was president of Welev.             
          He signed the mortgage deed.  Ruth Levitt knew very little about            
               Weiss incorporated Welev around 1960.  Welev issued 30                 
          shares of stock when it was incorporated.  The original                     
          subscribers to the stock were petitioner, Berger, Meyer                     
          Tepperman, and Weiss.  Each had 7.5 shares.                                 
               In 1970, Resyn owed Hooker Chemical Co. (Hooker) about $2              
          million.  Hooker supplied folacin hydride to Resyn.  Petitioner             
          agreed to guarantee Resyn's debt.  Petitioner pledged the Welev             
          property as collateral to Hooker.                                           
               In 1986, Welev sold its Florida property.  Petitioners filed           
          separate returns for 1986.  Ruth Levitt reported on her return a            

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