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1992. As a result of that examination, respondent determined
that the plan was not operated exclusively for the benefit of
petitioner's employees pursuant to the requirements of section
401(a)(2). Respondent based that determination on the conclusion
that the loan was not a prudent investment and caused the plan to
lack diversity of assets. Accordingly, on June 9, 1995,
respondent issued a final revocation letter revoking the
favorable determination letter dated July 8, 1987, on the ground
that the plan did not meet the requirements of section 401(a) for
the plan year ended September 19, 1987, and all subsequent years,
with the consequence that its related trust was not exempt from
income tax under section 501(a).
Other Business Dealings Between Mr. Shedd and Mr. Estes or
Related Entities
Throughout the years, Mr. Shedd and Mr. Estes have entered
into a number of business ventures. For example, Mr. Shedd owns
a 25-percent interest and Mr. Estes owns a 75-percent interest in
Adam Development Co. (Adam Development), a land holding
partnership formed during 1977. Mr. Shedd owns a 25-percent
interest and Mr. Estes and other Estes employees own the
remaining interest in Brava, a partnership formed during 1977 or
1978 to purchase model homes from Estes Co. and then to lease
them back to Estes Co. During 1977 or 1978, Mr. Shedd owned a
24-percent interest and Mr. Estes and other Estes employees owned
the remaining interest in Caprice, a partnership formed to
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