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by two partnerships in which petitioners’ wholly owned S
corporation was a partner.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Petitioners are married. When they petitioned this Court,
they resided in Greenwood, Arkansas.
During 1995 and 1996, petitioners jointly owned 100 percent
of the stock of Griffin California Enterprises, Inc. (Griffin
California), an S corporation as defined by section 1361(a)(1).
In turn, Griffin California owned 60 percent of each of two
partnerships (the partnerships): Orange Tree Commerce Center
Partnership (Orange Tree) and Solano Commercial Investors, a
California Partnership, d.b.a. Texas Jacks (Texas Jacks).
During 1995 and 1996, each of the partnerships owned
commercial real property in Vacaville, California. Orange Tree
owned Orange Tree Plaza, a small shopping mall. Texas Jacks
owned a western dance hall. Petitioners personally owned no
interest in these real properties, other than indirectly through
their ownership of Griffin California.
On or about April 18, 1991, Orange Tree borrowed $6,251,000
from Napa Valley Bank (the Orange Tree loan) for the purpose of
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