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Sometime prior to September 29, 1988, Mr. Jordan, H.T.
Jordan, and Mr. McGuire decided to withdraw from Wholesale
Fuels. Mr. Petty thereafter repaid Mr. Jordan the $50,000
he had contributed to the corporation. The record does not
disclose whether Mr. McGuire or H.T. Jordan had contributed
any capital to the corporation, or whether they were repaid
for any such contribution. On September 29, 1988,
petitioner prepared, but did not send, a letter to the
Internal Revenue Service stating that he was the sole
shareholder of Wholesale Fuels, that Mr. Jordan, H.T.
Jordan, and Mr. McGuire were no longer shareholders, and
that the corporation was electing "small business
corporation" status under subchapter S of the Internal
Revenue Code.
Wholesale Fuels never conducted any business activity
and never filed a Federal income tax return. However, the
company did maintain its checking account at Founders Bank.
Mr. Petty periodically used the funds in this account to
pay expenses incurred on behalf of H&B. On July 21, 1988,
petitioner signed check No. 1196 drawn on H&B's First
Interstate account and made payable to Wholesale Fuels,
Inc., in the amount of $6,000. Neither the check nor H&B's
pegboard ledger bears any notation of the purpose for this
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