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Lisle received total distributions of $384,840 from FPC
Subventure. Kanter and Lisle reported on their tax returns their
respective distributive shares of the FPC Subventures'
partnership's income and losses.
D. The Schnitzer Arrangement: Sale and Repurchase of Property
Management Systems Stock.
During the 1960's and 1970's, Schnitzer was a major real
estate developer in the Houston, Texas, area. Schnitzer met
Ballard and Lisle when they worked in Prudential's regional
office in Houston, probably in the late 1960's.
Schnitzer had been involved in developing and managing high-
rise office buildings through Century Development Co., Inc.
(Century Development), a subsidiary of Century, Inc. (Century),
Schnitzer's family holding company.
The real estate development business, however, typically was
cyclical. In 1974, to diversify its operations and to secure a
steady source of earnings, a subsidiary of Century acquired for
$1.3 million the assets of a small real estate management company
called Fletcher Emerson Co., Inc. (Fletcher Emerson).13 Fletcher
Emerson managed office buildings and other commercial real
estate. A relatively small portion of its business included
13
The $1.3 million purchase price was roughly based on a
multiple of five times net earnings. At the time, the company
had before-tax net income of $250,000.
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