-5-
OMCC leased all of the land that it farmed. OMCC became
highly profitable. By 1997, OMCC farmed approximately 3,800
acres.
Owen suffered a stroke in 1989. Thereafter, he
substantially reduced his work on behalf of OMCC. Owen
transferred various assets to petitioner in 1989 and 1990. In
1989, he transferred to petitioner a remainder interest in
several pieces of real estate that he owned, reserving life
interests in those properties for Mildred. On January 1, 1990,
Owen transferred to petitioner nearly his entire partnership
interest in OMCC, thereby increasing her interest in OMCC from 50
percent to 99.5 percent. Owen died in 1992. At that time,
Mildred received Owen’s .5-percent interest in OMCC.
Between December 1987 and February 1996, petitioner
purchased commercial real estate properties and several large
tracts of farm land from third parties. Petitioner leased farm
land to OMCC.
D. Farm Loan Lawsuit
1. Proposed Compromise
In October 1990, the Agriculture Department agreed with Cook
Farms to settle the outstanding farm loan debt of more than $1.6
million (including accrued interest) in exchange for $75,000 to
be remitted in four installments. Cook Farms paid the first
installment but did not pay any other installments. As a result,
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