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the investment interest limitations of section 163(d) as modified
by the Revenue Act of 1986, Pub. L. 99-514, 100 Stat. 2085.
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the tax years involved.
Petitioners resided in Centerville, Utah, when the petition
in this case was filed. Petitioner is an employee of Russon
Brothers Mortuary (Russon Brothers), a Utah corporation that was
organized as a "C" corporation in 1969 and continues as such to
the present. Petitioner began full-time employment with Russon
Brothers in September 1979 as a funeral director and has
continued full time with Russon Brothers to the present.
On December 23, 1985, Scott, his brother Brent C. Russon,
and two cousins, Robert L. Russon and D. Gary Russon, agreed to
buy all the stock in Russon Brothers from Scott and Brent's
father, Milton W. Russon, Robert's father, Leo W. Russon, and
Gary's father, Dale L. Russon. Milton, Leo, and Dale are
brothers, each of whom owned one-third of the stock of Russon
Brothers. Scott, Brent, Robert, and Gary agreed to pay their
fathers $999,000 for the stock in Russon Brothers, each son to
pay one-fourth (1/4) of the purchase price, payable ten percent
(10%) down and the balance payable in 180 equal monthly payments
with interest at nine percent (9%) on the remaining balance. The
Agreement gave the four buyers the "right to exercise the
ownership rights * * * [which] shall include * * * the right to
all the dividends from the stock," except as limited by the
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