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(2) petitioner would remain the primary lessee in respect of all
future leases of the premises for use by new corporations formed
by petitioner, (3) petitioner intended for 2618 to remain as his
sublessee until an SOB permit and “liquor license” (both of which
were then the subject of litigation) were acquired for the
premises, and (4) at that time, petitioner would make JKP his
sublessee under a 10-year sublease.
JKP was incorporated in Texas on February 22, 1990.
Petitioner was the sole shareholder of JKP. The litigation
against the city of Houston resulted in the issuance, on March
14, 1990, of an SOB permit to Virginia Sanders, who resided with
petitioner, was his legal assistant, and was president of JKP.
The permit was issued for use at the club’s premises, whereupon
petitioner applied for a mixed beverage permit on behalf of JKP.
Shortly after the issuance of such permit on or about November 1,
1990, operation of the club was transferred from 2618 to JKP,
which became the sublessee of the club’s premises from petitioner
pursuant to the February 20 agreement and lessee, from
petitioner, of the tangible and intangible personal property
relating to the operation of the club that had been acquired by
petitioner from 2618 on February 15, 1988. In January 1991, JKP
sold all of the assets needed to operate the club, including its
leasehold interest in the premises and in the other assets leased
from petitioner, for $1.1 million.
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