-5-
Mrs. Jones received $150,000, which she had in a bank account in
her name at the time of trial.
B. The Corporations
During the 3 years at issue, petitioner was the sole
shareholder and president of INI, a C corporation, and of
Towergate Townhomes, Inc. (Towergate), and Development, which are
both S corporations. Also during this time, petitioner and Mrs.
Jones were each 50-percent owners of Carlsgate Properties, Inc.
(Carlsgate), an S corporation. During 1989 and 1990, petitioner
was president and owner of Winterchase Townhomes, Inc.
(Winterchase), a C corporation.
INI
INI operated as a developer of real estate and managed a
60,000-square-foot building that was developed by a related C
corporation, Spalding.
INI was incorporated on June 25, 1984, at which time it
issued 1,000 shares of stock--500 to petitioner and 500 to Ronald
Cates (Cates). When INI was incorporated, petitioner and Cates
each owned 50 percent of Spalding. Spalding operated as a holder
of raw land and a developer of real estate.
On November 1, 1984, petitioner and Cates transferred all of
their shares in INI to Spalding, and INI became a wholly owned
subsidiary of Spalding. Thus, petitioner and Cates each owned 50
percent of Spalding, and Spalding owned 100 percent of the INI
shares outstanding.
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