Wagner Construction, Inc. - Page 3




                                        - 3 -                                         
               During the years in issue, Dennis and Curtis were                      
          petitioner's sole stockholders.  Dennis and Curtis are the sons             
          of Clifford Wagner (Clifford) and Evelyn Wagner (Evelyn).                   
          Dennis was born in 1952, and graduated from high school in 1971.            
          Curtis was born in 1954, and graduated from high school in 1973.            
          Neither Dennis nor Curtis attended college.  Both began working             
          with their father when they were young boys.                                
               Petitioner is the successor to a partnership called Clifford           
          Wagner & Dennis Wagner Construction (Wagner & Wagner).  Clifford            
          and Dennis formed Wagner & Wagner in 1974 to conduct a logging              
          business.  In 1976, Wagner & Wagner acquired a construction                 
          business that previously had been owned by Clifford and a third             
          individual.  Clifford and Dennis each owned a 50-percent interest           
          in Wagner & Wagner.                                                         
               On November 1, 1985, Clifford and Dennis incorporated                  
          petitioner.  At that time, the construction business of Wagner &            
          Wagner was well established; the partnership had approximately 30           
          employees1 and normally operated four construction crews during             
          the construction season.                                                    
               Wagner & Wagner transferred assets of $638,916 and                     
          liabilities of $127,543 to petitioner.  The transfer was treated            
          as a contribution to capital on petitioner's books.  The amount             


               1Wagner & Wagner had seven or eight full-time employees; the           
          other employees were seasonal.                                              





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Last modified: May 25, 2011