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supplemental stipulations of facts are incorporated herein by
this reference.
At the time of filing the petitions in these consolidated
cases, petitioner Roy M. Speer resided in Freeport, Grand
Bahamas, in the Bahamas, and petitioner Lynnda L. Speer resided
in New Port Richey, Florida. Petitioners filed joint U.S.
Individual Income Tax Returns (Forms 1040) for the taxable years
1988 through 1990. Petitioner Roy M. Speer filed a U.S. Gift
(and Generation-Skipping Transfer) Tax Return (Form 709) for the
taxable year 1990. Petitioner Lynnda L. Speer also filed a Form
709 for the taxable year 1990. Petitioners elected to split
their gifts pursuant to section 2513 for the taxable year 1990.
Constructive Dividend Issue
Pioneer Data Processing, Inc. (Pioneer), was incorporated
under the laws of the State of Florida in August 1978.3 When
Pioneer was originally incorporated, petitioner Roy M. Speer (Mr.
Speer) was the president and a shareholder. On July 1, 1981, Mr.
Speer transferred all the stock of Pioneer to Robert L. Cox, Mr.
Speer’s insurance agent, and resigned as president of Pioneer.
Mr. Cox became president of Pioneer. On March 7, 1984, Mr. Cox
3Pioneer was originally incorporated under the name Pasco
Data Processing, Inc. Pioneer subsequently merged with Western
Hemisphere Sales, Inc., a Florida corporation, in August 1991.
In the merger, Pioneer was the surviving corporation and changed
its name to Western Hemisphere Sales, Inc. For convenience, the
surviving corporation will hereinafter be referred to as Pioneer.
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