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FINDINGS OF FACT
Some facts have been stipulated and are so found. The
stipulation of facts, with attached exhibits, is incorporated
herein by this reference.
At the time the petitions were filed, petitioner resided in
Totowa, New Jersey.
Wedgewood Associates, Inc.
During the years in issue, Wedgewood Associates, Inc., a New
Jersey corporation (Wedgewood), was an S corporation, see sec.
1361(a)(1), making its return of income on the basis of a
calendar year. Wedgewood was in the restaurant business. In or
before 1987, petitioner became a shareholder in Wedgewood.
Beginning in 1987 and ending in 1990, petitioner owned the
following percentages of Wedgewood’s shares:
Year Percentage
1987 39.48
1988 52.00
1989 73.00
1990 73.00
Wedgewood was unsuccessful in the restaurant business. It ceased
doing business sometime in 1990, and, on or about March 14, 1990,
by Deed of Assignment for the Benefit of Creditors (the deed), it
conveyed its property for the benefit of those creditors.
Attached to the deed is a “Statement of Assets”, which lists
restaurant fixtures, equipment and furnishings subject to liens
of $1,865,000, a liquor license, cash on hand, accounts
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