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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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