Wayne M. and Janet L. Johnson - Page 3

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               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          codified at 42 U.S.C. sec. 1452(b) (1988) (repealed by Act of               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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