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I. Sale of the Property
Beginning in 1969, the Corporation was a franchised Toyota
automobile dealership d/b/a Acadian Toyota. The Corporation
leased property located at 3203 Johnston Street in Lafayette,
Louisiana, from 1969 to 1978. In August 1978, the Corporation
acquired the property and improvements located at 5001 Johnston
Street, Section 64, T10S-R4E, in Lafayette (the Property), for
$566,034 and moved to that address. Beginning in 1979, the
Corporation was also a franchised Volvo automobile dealership
d/b/a Acadian Toyota-Volvo.
During the taxable year 1987, the Laniers were the
Corporation's sole shareholders. G. Talbott Robertson
(Robertson), a certified public accountant, informed the Laniers
in late 1986 that a "precipitous" decline in real estate values
in Lafayette presented the potential opportunity to transfer
ownership of the Property from the Corporation to the Laniers
without incurring a large tax cost. To that end, Robertson
encouraged the Laniers to seek an appraisal of the Property.
The Corporation hired Warren G. Monies (Monies) to appraise
the Property. On February 16, 1987, Monies issued an appraisal
report which estimated the FMV of the Property to be $424,085 as
of that date. Mr. Lanier said that at the time he "thought it
[the appraisal] was low."
After receiving Monies' appraisal, the Laniers instructed
their attorney to use the selling price of $425,000 in a Credit
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