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1993 and for prior years' efforts yet uncompensated". One day
before, Mr. Ashare had received and deposited petitioner's check
in the amount of $1,061,971. The board also resolved on December
31, 1993, that petitioner's officers are "authorized, empowered
and directed, for and on behalf of the Corporation, to execute a
Promissory Note in favor of the sole Shareholder in the principal
amount of Eight Hundred Sixteen Thousand Seven Hundred Fifty-Six
and no/100 ($816,756.00) Dollars". Petitioner issued the
referenced note to Mr. Ashare on the same day. The board also
resolved on December 31, 1993, that $100,000 of the $916,756 that
Mr. Ashare lent petitioner during the year "shall be duly
reflected" on petitioner's books as a contribution to capital.
Petitioner's December 31, 1993, balance sheet does not reflect
any of the lent amount as a capital contribution, and Mr. Bess
does not understand Mr. Ashare to have transferred the $100,000
to petitioner as a capital contribution.
Respondent began auditing petitioner's 1993 taxable year in
or about December 1994, and the case was assigned to a revenue
agent who had not been involved in the audit of petitioner's 1990
through 1992 taxable years. The agent examined petitioner's 1993
tax return and requested and received correspondence from
petitioner's representative, David Lieberman. The agent had no
direct contact with either Mr. Ashare or any of petitioner's
other officers or employees.
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