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Mr. Martin presented a request for the approval to
change the borrower on the $1.1 million in loans to
Salem, Saxon & Nielsen, P.A. to the names of Richard J.
Salem, Bernice S. Saxon, and Richard A. Nielsen based
on their pro-rata share ownership of the firm. * * *
Mr. Martin indicated that as a result of an IRS audit
the firm is undergoing, the partners are being
questioned regarding the basis of their individual
ownerships in the corporation. He mentioned that the
P.A. will hypothecate its assets as collateral for the
notes to the partners. He indicated that we will
continue to have a $700M assignment of life insurance
on Mr. Salem. He mentioned that Mr. Salem owns 85%,
Ms. Saxon owns 10%, and Mr. Nielsen owns 5% of the
firm. * * *
C. Gulf Properties of Pinellas County, Florida III, Inc.
Mr. Salem owned a one-third interest in an S corporation
known as Gulf Properties of Pinellas County, Florida III, Inc.
(Gulf Properties). On June 30, 1988, Gulf Properties purchased
property located at 300 Gulf Boulevard, Belleair Shores, Florida
(300 Gulf Boulevard), for the purchase price of $600,000. On
December 28, 1990, Gulf Properties transferred title of 300 Gulf
Boulevard to Mr. Salem, subject to a mortgage in the amount of
$530,900. Between 1987 and 1992, real property values dropped
significantly in the area of 300 Gulf Boulevard.
D. Petitioners' Income Tax Returns
The Salems filed a joint income tax return (Form 1040) and
an amended return (Form 1040X) for the taxable year 1990. The
Salems reported a net operating loss for 1990 in the amount of
$192,546. In computing the 1990 net operating loss, the Salems
included the $221,140 loss from SS&N. The Salems did not report
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