- 4 - In 1987, petitioner organized two S corporations: Living Care Alternatives of Kirkersville, Inc. (LCAK), and Living Care Alternatives of Utica, Inc. (LCAU). Petitioner transferred ownership of the Kirkersville Nursing Home to LCAK and ownership of the Utica Nursing Home to LCAU. After the transfers, he remained responsible for repaying the funds that he had borrowed to acquire the nursing homes. LCAK and LCAU never paid dividends or made other distributions to petitioner as a shareholder. LCAK and LCAU had no accumulated earnings and profits in 1993 and 1994. Petitioner, as president of the S corporations, signed promissory notes in which he agreed to pay himself and his former wife $576,130.42 on April 1, 1987, and $700,000 on October 8, 1987. On October 8, 1987, petitioner and his former wife borrowed $500,000 from County Savings Bank. Petitioner paid $450,000 to Braddock to repay her for financing the Utica Nursing Home purchase. He used the rest to renovate the Utica Nursing Home. 2. Management Petitioner bought the nursing homes so that he could earn income from operating them and to provide a job for his then- spouse. Petitioner planned to earn a fee for managing the nursing homes and for his wife to earn a salary for serving as the administrator of the nursing homes. Petitioner hoped to sellPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011