Kaps Warehouse, Inc. - Page 4

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            Kirkham--23 percent; J. Kirkham--18 percent; M. Kirkham--18                               
            percent; and L. Sponenburgh--18 percent.  At all relevant times,                          
            Kapsco was a going concern.                                                               
                  Kapsco operated 10 retail stores in fiscal year 1991 and 9                          
            retail stores in fiscal year 1992.  Kapsco's retail stores during                         
            those years were primarily located in eastern Idaho and included                          
            the following: (1) Blackfoot; (2) Driggs; (3) Idaho Falls--                               
            Milligan; (4) Idaho Falls--Park; (5) Montpelier; (6) Pocatello; (7)                       
            Rigby; (8) Shelley; (9) American Falls; and (10) Rexburg.  The                            
            retail stores were not separately incorporated.                                           
                  In order to expand their sales base, the Kirkham family                             
            organized Kaps Automotive Warehouse, Inc. (KAW), in 1979.  During                         
            the years at issue, KAW's shareholders and their respective                               
            percentage ownership interest were as follows: Petitioner--25                             
            percent; J. Kirkham--25 percent; M. Kirkham--25 percent; L.                               
            Sponenburgh--25 percent.  At all relevant times, KAW was a going                          
                  In 1979, KAW acquired Nordling Parts Co. of Twin Falls (NPC).                       
            (Although KAW acquired 100 percent of NPC's stock, NPC's original                         
            income tax returns for fiscal years 1991 and 1992 indicate that KAW                       
            owned only 75 percent of NPC's stock.)  NPC was KAW's jobber (or                          
            retail) store.  At all relevant times, NPC was a going concern.                           
                  During the years at issue, the officers of petitioner, Kapsco,                      
            NPC, and KAW were:  M. Kirkham--president; J. Kirkham--vice                               
            president; and W. Sponenburgh--secretary.                                                 

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