Scott C. and Sherry L. Russon - Page 3

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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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