David Taylor Enterprises, Inc. & Subsidiaries - Page 6

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               The dealership intended to recoup its costs of restoring the           
          classic cars by selling them at a profit.  In 1990, the                     
          dealership sold a Packard convertible for $330,000, earning a               
          profit of $143,340.  The dealership made three more sales that              
          year, and three in the succeeding year.8  The dealership                    
          thereafter strategically began acquiring more classic cars and              
          increasing its participation in promotional events to generate              
          interest, win competitions, and service the wealthy clientele the           
          dealership hoped would follow.  This plan was abruptly derailed             
          in 1997 when Mr. Taylor died, within a month of being diagnosed             
          with lung cancer.                                                           
               Mr. Taylor’s shares in the dealership represented most of              
          the value of his estate.  To raise money for the estate tax, Mr.            
          Taylor’s estate requested a liquidation of the DTE shares.                  
          Petitioner agreed to a section 303 stock redemption and resolved            
          to sell the classic cars to raise the necessary capital.  The               
          dealership hired a broker and sold approximately 69 classic cars            
          during 1999 and 2000, the years at issue.                                   

          property as a museum allowed the dealership to recoup some of the           
          overhead costs for maintaining and storing the cars, while still            
          holding them for sale.  The museum was open to the public from              
          1989 through 1999.                                                          
               8The dealership sold a total of 11 vehicles and made 6                 
          trades prior to the years at issue.                                         

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Last modified: May 25, 2011