John Bowden, Inc. - Page 3

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          companies2 in the El Paso, Texas, area.  Pursuant to the                    
          contract, Mr. Bowden recruited and trained insurance agents to              
          sell insurance exclusively for the insurance companies with which           
          he had contracted.  After incorporation of his business,                    
          Mr. Bowden continued to perform substantially the same services             
          for the insurance companies that he had performed prior to                  
          incorporation, but he worked as an employee of the corporation.3            
               Mr. Bowden served as the sole director of the corporation,             
          and his wife, Karol Bowden, served as secretary.4  The corporate            
          minutes reflect that B. Kent Straughan was appointed as corporate           
          accountant and was instructed to handle the tax preparation and             
          accounting requirements associated with the incorporation.                  
          E.P. "Bud" Kirk was appointed as corporate attorney.                        
               In a transaction to which section 351 is applicable,                   
          Mr. Bowden transferred property to the corporation in 1991                  
          consisting of $10,000 cash, an airplane with a zero basis, a Ford           
          van with a stated basis of $21,139, a computer system with a                

               2The insurance companies are Farmers Insurance Exchange,               
          Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century              
          Insurance Co., Farmers Texas County Mutual Insurance Co., and               
          Farmers New World Life Insurance Co.                                        
               3Because Mr. Bowden no longer operated the business as a               
          sole proprietorship, the insurance companies renewed their                  
          service contract with the corporation, with Mr. Bowden personally           
          performing the services.                                                    
               4The corporate minutes reflect that Karol Bowden served as             
          temporary secretary for purposes of the corporate meetings.                 

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Last modified: May 25, 2011