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accounting, and showing no gross receipts, sales, or other
income, WSAI filed no U.S. corporation income tax return for
1988, the tax year in which all the condominium units were sold
or transferred.
With the transfer of the last two condominium units to
petitioner in 1988, WSAI no longer held business assets, and
ceased to be a going concern. Upon transfer of all 18
condominium units in 1988, WSAI ceased doing business, but did
not formally dissolve. Its charter was revoked in 1990 for
nonpayment and nonfiling of Ohio franchise tax returns.
In April 1989, petitioner sold one of the units for $67,900.
Transfer of notes from WSAI to Canterbury Construction Co.
Following his receipt of the last two South Wood condominium
units, petitioner gave the Fosses, Navars, and Posas the option
of either having their loans repaid, or of having the loan
obligations taken over by Canterbury Construction Co.
(Canterbury), an S corporation wholly owned by petitioner that is
in the business of real estate construction and development. The
note holders chose to have Canterbury take over the loan
obligations and to continue receiving interest payments. While
petitioner did not, in his individual capacity, issue promissory
notes to any of the note holders, Canterbury issued new notes to
the Fosses, Navars, and Posas sometime after April 1989, and
began making interest payments on the notes.
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