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KWJ Corp. distributed the $921,150 as follows:
b. Flow of Money From Zeus: 1979 Through 1983
In 1979, IRA organized Zeus and acquired all the common
stock for $50,000. The $50,000 paid by IRA for the stock was
recorded on the books as $100 for the common stock and $49,900 as
paid in capital. IRA also lent Zeus $50,000. In 1979, Zeus
purchased a 6.14-percent interest in Village of Kings Creek
(Frey's first condominium conversion project) for $100,000.
The Frey corporation paid the following amounts to Zeus
during the years 1980 through 1983:
Year Payment
1980 $127,372
1981 105,764
1982 538,781
1983 110,125
Total $882,042
All of Zeus' income from its incorporation through 1983 is
attributable to the payments from the Frey corporation, interest
income, and partnerships (including Frey condominium partnership,
the Village of Kings Creek, and the Greens). IRA's consolidated
returns for 1979 through 1983 reported the following income, net
assets, and stockholder equity with respect to Zeus:
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