Eugene D. Lanier, Inc. - Page 9

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          election and therefore did not qualify for the general election             
          held on November 21, 1987.                                                  
               On October 30, 1987, after the primary election had taken              
          place, the Corporation determined that there was no realistic               
          possibility that its loan to the Committee would be repaid.                 
          Accordingly, the Corporation converted the loan to the Committee            
          into a political contribution.  The Corporation reported the                
          contribution as one of a number of nondeductible expenditures on            
          a Schedule M-1, Reconciliation of Income per Books With Income              
          per Return, attached to its 1987 return.                                    
               All of the moneys the Committee had classified as loans in             
          its State campaign finance reports were ultimately reclassified             
          as cash contributions; none of the loans were ever repaid.                  
          Neither the Laniers nor Vance received any cash distributions               
          from the Committee.  The Committee did not assume any of Vance's            
          or the Laniers' debts, nor did it pay any of their personal or              
          educational expenses.  In addition, neither the Laniers nor Vance           
          used any Committee property for their own personal benefit.                 
               On February 11, 1993, respondent issued notices of                     
          deficiency to the Corporation and the Laniers.  In the notices of           
          deficiency, respondent determined that the FMV of the Property              
          was $640,000 on March 31, 1987.  Respondent further determined              
          that the selling price of the Property equaled its book value in            
          the hands of the Corporation--$423,468.  Among other things,                
          respondent made adjustments to income of $216,532 for both the              

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