Alphonse Mourad - Page 3

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               During the year at issue, petitioner was the sole                      
          shareholder of V&M Management, Inc., an S corporation (V&M                  
          Management).2  V&M Management owned and operated a 275-unit                 
          apartment complex known as Mandela Apartments in Roxbury,                   
          Massachusetts.3                                                             
               On January 8, 1996, V&M Management filed a petition for                
          reorganization pursuant to chapter 11 of the U.S. Bankruptcy Code           
          in the U.S. Bankruptcy Court, District of Massachusetts, Boston.            
          The bankruptcy court appointed an independent trustee, Stephen S.           
          Gray (the bankruptcy trustee), to administer the reorganization.            
          In the bankruptcy action, the Commissioner filed proofs of claim            
          for employment taxes due and owing by V&M Management.                       
               On September 26, 1997, the bankruptcy court confirmed a plan           
          of reorganization (the plan).  The cornerstone of the plan was              
          the sale of Mandela Apartments and its related property.  Because           
          the plan called for full payment of the employment taxes owed by            
          V&M Management, the Commissioner had no objection to the plan.              
          On or about December 18, 1997, the bankruptcy trustee sold                  
          Mandela Apartments and its related property for $2,872,351.                 



               2Petitioner is also listed as owning 100 percent of V&M                
          Management on its 1998 and 1999 Forms 1120S, U.S. Income Tax                
          Return for an S Corporation.  V&M Management elected to be taxed            
          as an S corporation on Jan. 1, 1984.                                        
               3V&M Management d.b.a. Vasquez Development Co., Inc.,                  
          acquired title to Mandela Apartments from the Secretary of                  
          Housing and Urban Development on Dec. 11, 1981.                             




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