French E. Hickman and Janice C. Hickman - Page 5

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               During 1991, the Hickman corporation profit-sharing plan was           
          audited (1991 audit) by the Internal Revenue Service (IRS).   As            
          a result of that audit, the IRS made the following determina-               
          tions:  (1) The 1982 plan loan was a prohibited transaction under           
          section 4975(c)(1)(B) (1982 plan loan prohibited transaction);              
          and (2) the 1985 stock and real property transfer was a prohib-             
          ited transaction under section 4975(c)(1)(A) (1985 stock and real           
          property transfer prohibited transaction).                                  
               Harold D. Hines (Mr. Hines), an authorized representative of           
          petitioners and the Hickman corporation profit-sharing plan, sent           
          respondent's Appeals Officer who was handling the 1991 audit a              
          letter dated October 18, 1991, which set forth the final resolu-            
          tion of that audit (1991 settlement).  The 1991 settlement                  
          provided, inter alia, that petitioner was to correct                        
               the alleged prohibitive [sic] transactions [the 1982                   
               plan loan prohibited transaction and the 1985 stock and                
               real property transfer prohibited transaction] through                 
               repayment of the outstanding loan balance, principal                   
               plus interest, and a conveyance of the real property                   
               and stock in the Harrah National Bancshares, Inc. from                 
               the Profit Sharing Plan to The French Hickman Trust                    
               (this Trust is a revocable trust established by F.E.                   
               Hickman for estate tax purposes).                                      
               Attached to the 1991 settlement was, inter alia, peti-                 
          tioner's check dated October 4, 1991, payable to the Hickman                
          corporation profit-sharing plan in the amount of $398,027.48,               
          representing payment of the $130,000 principal balance of the               
          1982 plan loan (1991 principal payment) and interest of                     





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