Earle E. Murphy - Page 15

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            Lake Placid Corporation."  However, minutes from meetings on                               
            March 18 and June 11, 1988, make it clear that any future plans                            
            of a reorganization were abandoned when the board decided to                               
            follow the recommendation of Mr. Lotts, FSRC's accountant, and                             
            liquidate in order to benefit from the transitional provisions                             
            for small corporations in the Tax Reform Act of 1986.                                      
                  Petitioner argues that he did not understand his                                     
            accountant's advice.  Petitioner contends that he first learned                            
            that Mr. Lotts had treated the transaction as a liquidation upon                           
            receiving his 1988 Federal income tax return for filing.                                   
            Petitioner blames this mischaracterization of the transaction on                           
            a lack of effective communication, Mr. Lotts' "urgency to                                  
            liquidate", and the fact that Mr. Lotts was unaware of                                     
            petitioner's intent to reorganize.  However, the record reflects                           
            that petitioner is a well-educated individual who ran a                                    
            successful business for many years.                                                        
                  There is nothing in the record, other than petitioner's                              
            self-serving testimony, to indicate that Mr. Lotts did not follow                          
            petitioner's instructions while preparing both his individual and                          
            FSRC's corporate returns.  Petitioner did not call Mr. Lotts to                            
            testify about his tax advice or the circumstances surrounding the                          
            preparation of petitioner's individual return or FSRC's corporate                          
            return.  Moreover, the record reflects that as early as December                           
            19, 1987, Mr. Lotts advised FSRC's board to liquidate, and that                            
            on June 11, 1988, petitioner signed forms reporting the                                    




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