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33.33-percent member and the designated tax matters partner of
SDQ LLC during the years in issue. The day-to-day operations of
the Dairy Queen restaurant were managed by Kent Russell
(Russell).
Petitioner renovated the Dairy Queen restaurant in 1995.
Petitioner purchased a new cash register system and added a salad
display case. The renovations consisted of relocating the
fountain area to create a separate area for customers to get
their drinks, installing new tile, and adding a mop sink closet.
The renovation work was done at night so that the restaurant
could remain open.
During the first 14 weeks of 1995, petitioner was involved
in the renovation project and operations of the Dairy Queen
restaurant. He spent about 7 hours a week at the restaurant
busing tables, cooking hamburgers, and fixing the balls in the
playroom. Petitioner met with Russell every morning to review
the food and labor costs. After the first 14 weeks of 1995,
petitioner spent about 3 hours a day at the restaurant observing
operations. In 1996, petitioner spent about 3 hours a week at
the Dairy Queen restaurant.
Petitioner contributed Western Sizzlin’ SW to Shaw Ltd. in
May 1995. In 1996, Shaw Ltd. leased Western Sizzlin’ SW to
Shaw’s Gulf, and Shaw’s Gulf took over the business operations of
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