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or as applied to petitioners, resulting in respondent's incorrect
characterization of petitioners' income from CDI as nonpassive.
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and attached exhibits are
incorporated herein by this reference.
Petitioners are married and resided in Indianapolis,
Indiana, at the time they filed their petition in this case.
FINDINGS OF FACT
During the years at issue, petitioner was a shareholder or
partner in the following real estate-related enterprises: (1)
CDI; (2) Citimark Development Co. (Citimark); (3) Citimark
Management, Inc. (CMI); (4) Citimark Communications, Inc. (CCI);
and (5) Monaghan Leasing Co. (Monaghan).
Carlstedt Dickman, Inc.
CDI, an Indiana corporation, is a general contractor that
provides design and building services, including construction
management, to retail, industrial, and health care companies.
CDI had an election in effect to be treated as an S corporation
during the years at issue. The net income of CDI in 1990 and
1991 was $892,765 and $745,803, respectively.
Petitioner has been president, a director, and a shareholder
of CDI since its founding in 1982. Petitioner's wife (Mrs.
Carlstedt) was also an officer and director of CDI in 1990 and
1991. During the years at issue, petitioner owned 80 percent of
the stock of CDI, and Michael Dickman (Dickman), vice president
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