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the corporation listed the note among its assets as of yearend
1993 under the category “trade notes and accounts receivable”.
In addition to petitioner’s $50,000 note, the assets included in
the trade notes and accounts receivable category included notes
given to the corporation by petitioner’s two sisters relating to
certain amounts they also had received from the corporation. On
a Schedule L filed with its 1994 corporate income tax return the
corporation listed the note among its assets as of the beginning
of 1994 under the category “trade notes and accounts receivable”.
During 1993 and 1994, the Pattersons caused a reorganization
of the corporation (reorganization) under which its assets were
divided among it and three newly formed corporations; i.e.,
Charity Field Farms, Inc. (Charity), MDA Farms, Inc. (MDA), and M
& D Hay & Cattle Co., Inc. (M & D). Pursuant to the plan of
reorganization, during 1994 petitioner and her former spouse
surrendered their shares of common stock of the corporation in
exchange for shares of common stock of Charity and M & D.4
Neither the corporation nor Charity, MDA, or M & D included the
note as an asset as of yearend 1994 on the Schedules L they filed
3(...continued)
At trial, we also reserved ruling on objections to the
following exhibits: 10-R, 16-P, 19-P, 32-P, 35-P, 36-P, 37-P,
38-P, 39-P, 44-P, and 58-P. The party offering each exhibit
failed to overcome the objections to that exhibit at trial or in
the briefs. Consequently, we do not admit these exhibits.
4Richard Randolph also received shares of Charity’s class A
voting preferred stock.
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