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activities. Peter is an attorney admitted to practice in the
State of Florida. He handles all of the real estate development
paperwork, including the negotiations of financing and leasing
arrangements. Anthony is responsible for locating desirable
property sites. Respondent's adjustments that remain in issue
relate to three real estate development projects that Eli, Peter,
and Anthony operated through three corporations, REE, TNE, and
ME, each of which had elected to be treated as an S corporation
under section 1362(a).
REE
During 1991 and 1992, Eli was the sole shareholder of REE,
which was incorporated on August 21, 1991, in the State of
Florida. REE was organized to purchase and develop property and
to lease it to Blockbuster Video, Inc. (Blockbuster), which had
entered into a lease agreement with Eli, dated July 30, 1991.
Eli later assigned the lease to REE.3
On October 23, 1991, REE purchased property located at 910
Dunn Avenue (the Dunn property) in Jacksonville, Florida. The
Dunn property was formerly the site of a gasoline station and
required substantial environmental remediation due to land
contamination problems.
3 In their reply brief, petitioners object to
respondent's proposed finding of this fact on the ground that
respondent failed to prove that Eli assigned the lease to REE.
Petitioners, however, did not submit any evidence that supports
their objection. After reviewing the record, the Court is not
persuaded that such an assignment did not in fact occur.
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