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earnings and profits available for distribution to shareholders.
See infra pp. 23-27.
On February 24, 1987, petitioner incorporated the individual
life and disability portion of his business under the name
Jerome J. Mancuso & Associates, Inc. (JJM). Petitioner
transferred $1,000 to JJM in exchange for 1,000 shares of JJM
common stock. Petitioner also transferred to JJM a $20,000 bank
deposit, an account receivable of $16,000, and office furniture,
fixtures, and equipment valued by petitioner at $37,000.
Petitioner and Mr. Pritten prepared six promissory notes
from JJM to petitioner. All of the notes issued by JJM are
preprinted "fill in the blank" promissory notes and signed in
Residential 9,389.13 Telephone/Sprint 782.86
Cash-personal 61,553.50 Legal/prof. 2,100.00
Bonus-JJM 13,064.20 Travel/ent. 27,666.94
Medical/dental 1,889.47 Repairs 156.00
The total of all payments listed in Exhibit 14-N is
$211,450. Respondent contends that the amounts contained in
Exhibit 14-N should be increased by $930.11 for the payment of
petitioner’s auto insurance. With this amount added to the
amounts in Exhibit 14-N, the total payments amount to $212,380.
We do not know which payments were made by JJM and which
payments were made by GAPS. Petitioner used one operating
account, in the name of JJM, to make all the payments.
Consequently, all the copied checks attached to Exhibit 14-N are
JJM checks. Exhibit 14-N does not differentiate between payments
made by GAPS and JJM, and respondent never apportioned the
specific payments between the two corporations. Of the $212,380,
we have apportioned $119,760 as the amount of the payments from
GAPS and $92,620 as the amount of the payments from JJM. For a
discussion of how we apportioned the total payments between GAPS
and JJM, see infra note 8.
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