B & D Foundations, Inc. - Page 4




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          Myers and retired.  In late 1986, petitioner was incorporated to            
          conduct the foundation and flat work contracting business                   
          previously operated by the B & D partnership and by Mr. Myers.              
               Upon incorporation of petitioner, Mr. and Mrs. Myers                   
          invested $10,000 in its capital stock; Mr. Myers received 51                
          percent of petitioner’s outstanding shares of common stock, and             
          Mrs. Myers received the other 49 percent.  Mr. and Mrs. Myers               
          have owned these same stock interests throughout petitioner’s               
          existence (including the year in issue, ended July 31, 1996).               
               Mr. and Mrs. Myers also made advances to petitioner of                 
          $77,237, which were shown on petitioner’s books and income tax              
          returns as debt.  The record does not show how the advances were            
          divided between Mr. and Mrs. Myers or whether petitioner paid               
          interest on them.  Petitioner paid off these advances over the              
          first 4 years of its existence.                                             
               Since 1987, when petitioner began operations, Mr. and Mrs.             
          Myers have played complementary roles as the only members of its            
          management team.  Mr. Myers has handled all work in the field,              
          and Mrs. Myers has maintained petitioner’s books and provided all           
          administrative support.  In 1987, petitioner employed about 10              
          construction workers.  Over the years, petitioner has employed up           
          to 35 to 40 construction workers, depending on work volume.                 
               Throughout petitioner’s existence, Mr. Myers, during peak              
          construction periods, has worked long hours to accomplish a                 






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Last modified: May 25, 2011