Al Zuni of Arizona, Inc. - Page 4




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          obligation to Khalaf.  In those same minutes, the transfer of the           
          balance of Al Zuni’s jewelry inventory to Khalaf is described as            
          a sale by Al Zuni and as a purchase by Khalaf of the balance of             
          the jewelry inventory for a total price of $671,413.                        
               A resolution reflected in the September 15, 1992, minutes of           
          Al Zuni's board of directors’ meeting indicates that Al Zuni’s              
          purported sale of jewelry to Khalaf for $671,413 was contingent             
          upon payment by Khalaf to Al Zuni of the $671,413 stated purchase           
          price.                                                                      
               The evidence establishes that Khalaf did not pay to Al Zuni            
          any portion of the $671,413 stated purchase price for the                   
          jewelry.  The parties herein, however, have stipulated, and we so           
          find that on September 15, 1992, Al Zuni’s jewelry inventory was            
          transferred and that Al Zuni’s total cost basis in the jewelry              
          inventory transferred to Khalaf on September 15, 1992, was                  
          $538,000.                                                                   
               After the transfer to Khalaf of its jewelry inventory, Al              
          Zuni had no remaining assets and conducted no further business              
          activity.                                                                   
               On September 24, 1992, 9 days after the above transfer,                
          Khalaf transferred apparently the same jewelry inventory to                 
          American Silver Jewelry Outlet, Inc. (American Silver), a related           
          corporation of which Khalaf was president and in which Khalaf’s             
          daughter was the sole shareholder.  The nature and specific terms           
          of the transfer of jewelry from Khalaf to American Silver are not           
          disclosed in the record.  In a special September 24, 1992,                  


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