James R. and Myrtice L. Peacock - Page 3

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          stipulated facts accordingly.  James R. Peacock (Mr. Peacock) and           
          Myrtice L. Peacock (Ms. Peacock) are husband and wife, and they             
          filed joint Federal income tax returns for the subject years.               
          They resided in Ponce Inlet, Florida, when they filed their                 
          petition with the Court.                                                    
               Mr. Peacock has worked in the automobile industry for                  
          approximately 20 years, and he has owned various automobile                 
          dealerships.  One of those dealerships, Speedway Dodge, Inc.,               
          formerly known as Hurley Dodge, Inc. (the dealership), was                  
          located on Florida’s east coast.  In or about 1993, Mr. Peacock             
          spoke to an acquaintance (the acquaintance) living on Florida’s             
          west coast about working for the dealership as its general                  
          manager.  Mr. Peacock persuaded the acquaintance to accept the              
          position by causing the dealership to lend $50,000 to the                   
          acquaintance to use as a downpayment on a condominium near the              
          dealership.  Mr. Peacock believed that the acquaintance would pay           
          the money back to the dealership when the acquaintance had the              
          money to do so.                                                             
               In October 1993, Mr. Peacock sold 51 percent of his 100-               
          percent ownership interest in the dealership to spend more time             
          with his wife in an activity, fishing, that they had both enjoyed           
          since their childhood.  At or about the time of sale, the                   
          acquaintance moved back to Florida’s west coast without having              
          made any payments on the loan.  When the acquaintance moved back            

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