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Petitioner is a certified public accountant. During the
year at issue, he was an owner-shareholder in a certified public
accounting firm, Rendina & Vitantonio, Inc.
Wood Street Apartments, Inc.
In 1986, petitioner and Thomas J. Ackerman (Ackerman), a
construction contractor, formed WSAI as a general business
corporation under Ohio law, for the purposes of constructing and
selling 18 condominium units in Willoughby, Ohio. WSAI was
operated as a C corporation. Petitioner and Ackerman each paid
WSAI approximately $250 for an equal number of common shares of
WSAI.
In 1987 and 1988, WSAI constructed the 18 condominium units,
known as “South Wood Condominiums” (South Wood). South Wood
consists of two-story townhouses, built in clusters of six units
in each of three buildings.
WSAI financed the construction of South Wood primarily with
borrowed funds. The funds used by WSAI consisted of a loan from
Security Federal Savings and Loan of approximately $740,000,
petitioner’s deposits in WSAI’s checking account of approximately
$41,200,3 and approximately $68,000 in loans from three of
3Petitioner made three deposits into the account. On
Apr. 11, 1987, petitioner deposited $20,200 into the account. On
Sept. 22, 1987, petitioner deposited $20,000 into the account,
with a notation on the deposit ticket indicating that the deposit
was a “loan”. On Oct. 6, 1987, petitioner deposited $1,000 into
the account.
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