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sole proprietor under the name of J.J. Mancuso & Associates.
Petitioner’s business was divided into two lines: Group employee
benefit plans and individual life and disability contracts.
In late 1985, petitioner purchased a corporation named Rapid
Dictation Service, Inc. (Rapid Dictation), from an attorney for
less than $500. Petitioner believed, based on the seller's
representations, that the name of Rapid Dictation was changed to
Group Administration Premium Services, Inc., sometime in early
1986 and that it was a corporation in good standing under
Illinois law.
Early in 1986, petitioner began to conduct a portion of his
business under the name GAPS. Petitioner intended to use GAPS to
sell and administer all group employee benefit plans of his
clients. From 1986 to March 1, 1989, petitioner continued to
operate Rapid Dictation, under the name GAPS, on the basis of his
belief that it was a valid corporation.
In February 1989, petitioner’s then attorney advised him
that Rapid Dictation was an invalid corporation and that a new
corporation should be organized. On March 1, 1989, GAPS filed
articles of incorporation with the Illinois secretary of state.
On March 7, 1989, petitioner, acting as sole director,
transferred to the newly organized corporation GAPS all of the
assets and liabilities of the business that he had been
conducting under the name of GAPS. These assets consisted of two
bank accounts containing $154,000 and furniture and equipment
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