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Ameritech and by delivery of Ameritech's check in the amount of
$103,000 payable to 303 Products to petitioner Praegitzer. The
assets transferred from Ameritech to 303 Products also included
$59,000 worth of inventory and equipment. The total value of the
assets transferred was approximately $183,000.
Petitioner Praegitzer transferred his remaining 2,500 shares
of Ameritech to Ameritech, and Ameritech assigned its 1,000
shares of 303 Products to petitioner Praegitzer on January 30,
1990. Petitioner Praegitzer resigned as an officer and director
of Ameritech on January 30, 1990. On that same day, petitioner
Praegitzer, Kerry Dawes, and Ameritech executed a mutual release.
Petitioner Praegitzer was concerned when he received the
$103,000 check payable to 303 Products. His accountant, Dave
Scott, told petitioner Praegitzer that since he was the sole
owner of 303 Products it would be alright for him to go ahead and
cash the check. On February 2, 1990, petitioner Praegitzer went
to the bank with the $103,000 check, converted it into a
cashier's check payable to 303 Products, and then deposited the
cashier's check into the corporate checking account of 303
Products. Also on February 2, 1990, petitioner Praegitzer caused
303 Products to issue him a check for $103,000 which he deposited
into his personal checking account.
The $103,000 was recorded on the accounting books of 303
Products as received by the corporation. At the time that
petitioner Dawes signed the MSA and the reorganization agreement,
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