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1Lewis Smith was unrelated to any of the other SPC-FL
shareholders. Mr. Smith resigned and sold his 5-percent interest
in SPC-FL to Mrs. Schroeder during 1933.
During the years in issue, SPC-FL was a calendar year S
corporation within the meaning of section 1361. Mr. Spencer was
the chief executive officer and treasurer of SPC-FL, Mr.
Schroeder served as its chief operating officer, and Mrs.
Spencer, also a corporate officer, worked at SPC-FL as an office
clerk.
Nominal Resale of Florida Assets to SPC-FL
During August 1990, the SPC-FL shareholders nominally
conveyed the same assets acquired in the Florida transaction to
SPC-FL in consideration for $1,150,000. Neither that conveyance
nor the consideration for the transaction (hereinafter referred
to as the SPC-FL nominal debt) was documented.16
Payment Flow
All payments on the $1,150,000 S/S/S note have been made
from SPC-FL's current corporate revenues. No payments have been
directly made by the SPC-FL shareholders.
SPC-FL began making payments to SSI during September 1990
and continued to do so until October 1991. SPC-FL began
experiencing cash-flow problems during 1991, and no payments were
16 The parties stipulated that the "note" from SPC-FL to the
SPC-FL shareholders was never documented. We take this
stipulation to mean that the consideration given by SPC-FL to its
shareholders took the form of a debt that was never documented by
a note.
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