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Chamblee, executed the petition in this case on the corporation's
behalf.
At the time of its incorporation, petitioner acquired
approximately 450 acres of land, improved with a cabin. The
shareholders used the cabin as a private hunting lodge during the
years 1971 through 1993. On January 30, 1971, 10 days after
incorporation, the six original shareholders signed an agreement
stating that the property would be used by the six "original and
sole owners and partners" of the hunting club and their immediate
families as a recreational facility only. The agreement also
states that none of the six will make or produce a product nor
sell his shares or hunting rights to outsiders, and, if at any
time one of the "six partners" wishes to withdraw from the
"partnership," he must sell his shares to the other partners
only.
Petitioner secured an employer identification number and
filed corporate Federal income tax returns on Form 1120 for 1980
through 1993. On its Federal income tax returns, petitioner
depreciated the cabin and reported net income for the years 1980
through 1986, and 1990. Chamblee never reported any share of
petitioner's net income on his personal Federal income tax
returns.
On February 5, 1993, petitioner sold the property to
Champion International Corporation (Champion) for $168,750. On
September 7, 1993, petitioner was dissolved. That same year, its
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