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resultant back surgery was paid for by SFLP. SFLP also paid
nearly $40,000 in 1994 for funeral expenses, estate
administration expenses, and related debts of decedent, including
a $19,810.28 check to Olsten for nursing services. SFLP then
paid more than $65,000 in 1995 and 1996 for estate expenses and a
specific bequest to decedent’s sister. In July 1995, SFLP
distributed $3,187,800 to decedent’s estate for Federal estate
and State inheritance taxes. When such disbursements were made
to or for the benefit of decedent or his estate, Stranco received
corresponding and proportionate sums either in cash or in the
form of adjusting journal entries. For accounting purposes,
certain amounts expended by SFLP were initially recorded on its
books as advances to, and accounts receivable from, partners.
SFLP also accrued rent on the residence occupied by decedent and
reported the rental income on its 1994 income tax return. The
accrued amount was paid in January 1997. Mr. Gulig made all
entries into the books and records of SFLP and Stranco and
prepared all income tax returns for the entities.
Estate Tax Proceedings
On January 17, 1996, a Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, filed on behalf of
decedent’s estate was received by the Internal Revenue Service.
The value reported on the Form 706 for the gross estate was
$6,823,582, which included $6,560,730 for decedent’s interest in
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