Timothy J. Phelan and Deborah A. Phelan - Page 7

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         utility installation, or roadway improvements required by the                
         town of Monument in connection with the development of the                   
         property.  Despite JCLC’s obligation under the agreement, Triview            
         completed all development work with respect to the Jackson Creek             
         property.                                                                    
              Vision Development Corp. (Vision) was organized during 1996             
         by petitioner, petitioner’s brother, and Oldach, with the same               
         ownership interests as that of JCLC of 40 percent, 40 percent,               
         and 20 percent, respectively.  On January 5, 1998, JCLC conveyed             
         a 46.5-acre portion of Jackson Creek to Vision in exchange for               
         $1,571,145.  JCLC’s 1998 partnership return reflected a long-term            
         capital gain of $47,319 with respect to this transaction, and                
         petitioner reported his distributive share of the gain on his                
         1998 personal Federal income tax return.  Vision was organized to            
         develop the 46.5-acre parcel for resale to Keller Homes (Keller).            
         Keller, a home builder, was originally interested in buying the              
         same parcel from JCLC.  Keller was not interested in purchasing              
         the 46.5-acre parcel unless it was developed and suitable for                
         residential home building.  After Elite expressed no interest in             
         developing the parcel for Keller, Vision was formed to perform               
         the development work and resell the property to Keller.                      
              Despite terms in the contracts prescribing that JCLC was to             
         be responsible for some development activities, Triview completed            
         all infrastructure development work that was performed on each               






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