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the Sundance Recreation Resort, located at Provo Canyon, Utah.
On that same day, the lot was conveyed by Silvercrest to Kelly by
warranty deed. Finally, on December 28, 1984, Kelly conveyed the
lot, by warranty deed, to petitioner, Dan A. Waddell (Waddell),
and Michael E. Truman (Truman) as tenants in common.
On May 1, 1986, petitioner, Waddell, and Truman (sometimes
referred to as the debtors) borrowed $530,000 from Richards-
Woodbury Mortgage Corp. (Richards), a Utah corporation, for
construction financing to build a luxury home (home) on the lot.
The debtors were each personally liable, jointly and severally,
for the full loan amount, and the loan note (note) was secured by
a mortgage on the lot. Richards negotiated the note to the
Citizens Banking Co. (Citizens) without recourse.
After its construction, the home was to be sold to
Timbercrest, a limited partnership organized by Silvercrest,
petitioner, and Kelly to purchase, maintain, and lease the home.
Silvercrest, petitioner, and Kelly were the general partners of
Timbercrest. Thereafter, 20 limited partners (investors) were
admitted into the partnership. Each limited partner made a
capital contribution of $35,000 per unit, payable partly in cash
and in large part by execution of promissory notes to the
partnership. The general partners owned 1 percent of the
partnership's capital and 99 percent was owned by the limited
partners. Profits and losses were allocated in the same ratios.
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