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corporate distribution or some other event that would impose tax
liability on either the corporation or petitioner.
The record, however, supports a finding that the conveyance
from Jaussaud Enterprises to petitioner satisfies the requirements
for constructive fraud under section 3439.04(b)(1) and/or (2) of
the California Civil Code. Jaussaud Enterprises did not receive
reasonably equivalent value in exchange for the transfer of the
Alhambra property to petitioner; in fact, Jaussaud Enterprises
received nothing for the property (which was sold for $329,000 in
an arm's-length transaction on the same day). Moreover, we do not
believe the note which petitioner executed in favor of Jaussaud
Enterprises represented a quid pro quo for the transfer of the
Alhambra property: (1) The promissory note was executed 3 years
after the conveyance to petitioner on the advice of a tax
professional (and the face amount of the note ($125,000) was
approximately $200,000 less than the amount realized ($329,000)
from the sale of the Alhambra property); (2) petitioner did not
understand that his receipt of the Alhambra property (or the sale
proceeds) constituted a loan from the corporation; and (3) we do
not believe the corporation ever intended to enforce the note's
terms (for example, the corporation took no legal action after
petitioner stopped making monthly payments).
On Schedule L, Balance Sheets, of the income tax return
belatedly filed by Jaussaud Enterprises for the tax year ended
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