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after July 15, 1983, and amended the ESOP effective June 30,
1985, and July 1, 1989. Petitioner received favorable
determination letters with respect to the ESOP and trust dated
December 8, 1983, March 24, 1986, and March 22, 1990. The plan
year and limitation year of the ESOP and the trust are the fiscal
year ending June 30.
The trust is and has been petitioner's sole shareholder
since petitioner's incorporation. Petitioner issued shares of
its stock to the trust in payment of the contributions to the
trust and in exchange for cash.
Howard E. Clendenen (Mr. Clendenen) is and has been
petitioner's president. On June 28, 1986, petitioner's board of
directors resolved:
That Howard E. Clendenen has advised the Corporation
that he desires to forego [sic] one-half of his salary
and bonuses for the fiscal year ended June 30, 1986
with the understanding that said one-half of his salary
and bonuses shall be contributed to * * * [the trust].
It is further understood that this transaction shall be
considered an employee contribution.
On June 29, 1987, petitioner's board passed a resolution
identical to that of June 28, 1986, resolution except for the
1987 year.
The ESOP's records reflect the following contributions to
the trust allocated to petitioner's employees as shown:
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