- 3 - account and treated as dividends from Adena, reducing his basis in Adena’s stock. Mr. Adams knew about and acquiesced to petitioners’ practice of paying personal expenses with funds from the Adena account. Mr. Yates personally guaranteed a large amount of debt relating to the mining companies (mining debt) and was concerned about the likelihood of personal injury lawsuits relating to employees of such companies. In an attempt to protect some of his assets from these risks, and to provide a mechanism to accumulate assets for retirement, on December 16, 1992, Mr. Yates incorporated Fox Trot as an S corporation. Through Fox Trot petitioners purchased, improved, and operated a Kentucky farm. Mr. Yates kept Fox Trot’s assets and liabilities separate from those of the mining companies. From January 1, 1993, until September 1, 1994, Mr. Yates was the sole shareholder of Fox Trot. On September 1, 1994, to further separate Fox Trot’s assets from the mining companies’ risk, Mr. Yates gave all of Fox Trot’s stock to Mrs. Yates, who was the sole shareholder of Fox Trot from September 1, 1994, through 1996. During the years in issue, Fox Trot experienced substantial losses. Mr. Yates used funds from Adena to finance Fox Trot.Page: Previous 1 2 3 4 5 6 7 Next
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