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Construction, Inc. (Group M). Petitioner's brothers, Timothy E.
Monahan and Peter J. Monahan, owned 45 percent and 10 percent,
respectively, of the outstanding stock of both Chestnut Grove and
Group M. Those corporations were organized for the purpose of
acquiring and developing a 16-acre parcel located in Yakima,
Washington (the Yakima property). That parcel was purchased in
March 1987 for $400,000.
B. Transactions in Issue
A check that was drawn on an account held by Chestnut Grove
and made payable to “Ihatsu Fudosan or Aldergrove Investment” in
the amount of $116,000 for “interest” was endorsed “Dep only” to
account number 250-0132969 at Security Pacific Bank (SP Bank),
which account was held in the name of Aldergrove (the Aldergrove
account). On December 26, 1991, SP Bank credited the Aldergrove
account in the amount of $116,000.
A check that was drawn on an account held by Group M and
made payable to “Ihatsu Fudosan or Aldergrove Investment” in the
amount of $84,700 for “interest” was endorsed “Dep only” to the
Aldergrove account. On December 26, 1991, SP Bank credited the
Aldergrove account in the amount of $84,700.
On December 31, 1991, SP Bank credited the Aldergrove
account in the amount of $140.66 for interest earned by the
account.
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