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same manner as before the transfer to Zero Gee. The customers
were invoiced in the name of LPS, and customers paid their bills
to LPS. Petitioner continued to make all the daily business
decisions for LPS, and petitioner established the levels of
compensation for employees of LPS.
In 1995, petitioner individually borrowed $130,000 and
obtained a $160,000 line of credit from a credit union secured by
real property owned by petitioner and Colleen Lund. The $130,000
loan proceeds and the funds obtained under the line of credit
were used in the business of LPS. The trustees of Zero Gee did
not authorize either of the above credit transactions.
For 1994, 1995, and 1996, the gross and net income of LPS
were as follows:
Year Gross Income Net Income
1994 $1,243,338 $ 170,448
1995 1,751,528 424,960
1996 2,401,225 640,317
Cumulative Total $5,396,091 $1,235,725
Of the above 3-year cumulative total $1,235,725 in net
income, International Palm and Universal Sun (the purported sole
beneficiaries of the trusts) received apparently $41,100, the
nature of which is not established in the record. Of the
$1,194,625 balance in the above 3-year cumulative total net
income of LPS, $750,000 was used to purchase another computer
consulting business, $24,000 was used to purchase gold mining
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Last modified: May 25, 2011