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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