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in and loans to the S corporations and the extent, if any, to
which petitioner recognized income upon the acquisition by one of
these corporations of assets from the other.
FINDINGS OF FACT
Some of the facts have been stipulated, and are so found.
The stipulations of fact and attached exhibits are incorporated
by this reference. At the time the petition was filed,
petitioners resided in Columbia, South Carolina.
In 1987 petitioner founded Williams Investigative & Security
Services, Inc. (WIS). Petitioner was the operator and sole
shareholder of WIS throughout its existence. WIS was primarily
engaged in the business of insurance investigations; it also
provided security services.
Throughout 1990 WIS was in a dispute with a client over a
major security services contract. The client unilaterally cut
back the amount of services required, then terminated the
contract prematurely and disavowed representations it had made to
WIS concerning future work engagements. At the end of the year,
WIS filed suit for fraud, breach of contract and promissory
estoppel, seeking recovery of compensatory and punitive damages
arising from the loss of the contract and the valuable
engagements. See Kemira, Inc. v. Williams Investigative & Sec.
Serv., Inc., 450 S.E.2d 427 (Ga. Ct. App. 1994).
As WIS’s financial situation deteriorated, it was compelled
to borrow. Third-party loans were not sufficient, however, to
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