Margaret Hancock - Page 6

          because buyers could not get financing due to the high interest              
          rates.  The larger builders in Phoenix "bought down" mortgage                
          interest rates from 18 to 9 percent for their home buyers, but               
          Hancock Enterprises could not afford to do that.                             
               After Hancock Enterprises stopped building houses,                      
          petitioner and her husband explored other development activities.            
          In 1985, they considered the possibility of building 5,000 low-              
          cost houses for the Government of Ecuador.  About that time,                 
          Hancock Enterprises sold some lots to repay its loans.  In 1985,             
          Hancock Enterprises owed about $2.5 million to the banks and                 
          $800,000 to petitioner and her husband.                                      
               In 1987, the City of Phoenix proposed to build a freeway                
          near Summer Shadows.  This made it harder for petitioner to sell             
          lots in Summer Shadows.  Petitioner later sold those lots when               
          the City of Phoenix built the freeway about 12 blocks from Summer            
               The Phoenix real estate market improved from 1991 to 1994.              
               5.   Liquidation of Hancock Enterprises                                 
               Petitioner became the trustee of the trust after her husband            
          died on December 31, 1985.  The parties agree that petitioner's              
          basis in Hancock Enterprises' stock stepped up to the date of                
          death value under section 1014(b)(6).                                        
               Hancock Enterprises made a bulk sale of six Playa del Sur               
          lots in 1986 for $52,870 per lot.                                            

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