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Bluff; at this time petitioner had a 26.8-percent interest in
Eagle Bluff; his equity amounted to $983,237.45 out of a total of
$3,667,212.45. There were more than 80 other partners; the next
greatest percentage interest was that of a couple, who between
them and their IRA, held an aggregate 8.8197-percent interest.
Petitioner invested an additional $307,151.86 in Eagle Bluff
between 1997 and 1998, which increased his percent interest to
31.71.
Petitioner signed the Plan’s check to Eagle Bluff.
Petitioner signed Eagle Bluff’s promissory note to the Plan, on
behalf of Eagle Bluff. The promissory note was a 12-percent-per-
year demand note; the note stated that it was secured by all the
property and equipment at Eagle Bluff. At the time of the loan,
12-percent interest was greater than market rate interest.
During 1999, Rollins paid a total of $3,900 of Eagle Bluff’s
interest obligations to the Plan, because Eagle Bluff was not
able to make the payments. During November and December 1999,
petitioner paid a total of $20,000, Rollins Financial paid
$7,500, and Rollins paid $7,500 of Eagle Bluff’s principal
obligations to the Plan, because Eagle Bluff was not able to make
the payments. All $35,000 of these 1999 principal payments were
treated as petitioner’s additional equity in Eagle Bluff.
Petitioner fully intended he would receive the funds back from
his equity when Eagle Bluff was sold.
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