Perry Funeral Home, Inc. - Page 5

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          Investments certificates of deposit, a BayBank money market                 
          account, a BayBrokerage account (for 1996 only), and a BayBank              
          escrow account.  Moneys received pursuant to preneed contracts              
          were placed by petitioner in one of the investment vehicles.                
          Upon petitioner’s provision of goods and services at the death of           
          a preneed contract beneficiary, an amount equal to the purchase             
          price of the contract was transferred from the investment                   
          accounts to petitioner’s checking account.                                  
               The BayBank escrow account is a compilation of accounts,               
          opened before 1996, each in the name of an individual contract              
          beneficiary.  Petitioner’s accountant advised establishment of              
          the escrow account in the early 1990s.  This account was used for           
          the deposit of preneed receipts for a period prior to the years             
          in issue, until the resultant administrative burden caused                  
          petitioner to discontinue the practice.  The balance of the                 
          BayBank escrow account as of January 1, 1996, was $106,579.16,              
          and those funds are not at issue in this proceeding.  The                   
          investments other than the Baybank escrow account are held solely           
          in petitioner’s name and list petitioner’s tax identification               

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Last modified: May 25, 2011