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Background
Petitioner Wayne Johnson (hereinafter petitioner) is an
attorney. Prior to the year in issue, petitioner was one of
three general partners in several partnerships organized under
the laws of the State of Maine. Additionally, petitioner was one
of three principal shareholders in two subchapter C corporations
incorporated under the laws of the State of Maine.4 These
entities were established in 1986 and 1987 for the purpose of
purchasing, rehabilitating, and managing inner-city structures in
Portland, Maine. The entities incurred substantial recourse debt
for the purchase and rehabilitation of the structures, which was
financed through Maine Savings Bank and also through section 312
of the Housing Act of 1964, Pub. L. 88-560, 78 Stat. 769, 790,
codified at 42 U.S.C. sec. 1452(b) (1988) (repealed by Act of
Nov. 28, 1990, Pub. L. 101-625, 104 Stat. 4128). The general
partners and shareholders, petitioner included, were required to
execute personal guaranties on the debt financed.
After the entities failed to pay the debt incurred, the
properties which were purchased by the separate entities were
foreclosed upon. An outstanding debt remained after the
foreclosure, and the entities defaulted on the debt in 1992. The
4 A fourth partner held a 2-percent interest in the
partnerships and corporations.
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Last modified: May 25, 2011