-9-
ALSL. During the relevant years, the owners of Sun Valley
Investments, a partnership, were Thomas and Stethem.
Pursuant to ALSL’s operating agreement, ALSL’s members were
required to contribute the following capital to ALSL:
Member Contribution
Edward Hubert $200
George Hubert, Jr. 200
Sharon Hubert 200
Ollinger 50
Stethem 50
Sun Valley Investments 100
Thomas 200
1000
None of ALSL’s members, with the exception of Thomas and Stethem,
ever contributed any capital to ALSL from his, her, or its own
funds. During 1996, Thomas and Stethem contributed $200,000 and
$50,000, respectively, to ALSL’s capital.4
As of December 31, 1995, ALSL reported for Federal income
tax purposes that it had cash of $7,298, that it owned a
$1,338,334 nonrecourse note receivable from ALD, and that it was
liable on a $1,345,684 nonrecourse note payable to HEI. ALSL
4 During HEI’s 1997 taxable year, Thomas was HEI’s most
highly compensated officer, and Edward Hubert, George Hubert,
Jr., and Sharon Hubert were its next three most highly
compensated officers. During that year, HEI paid Thomas
$420,922, and it paid $370,236 to each of the other three
officers. During HEI’s 1998 taxable year, Thomas received
significantly less compensation than these other three officers.
During HEI’s 1998 taxable year, HEI paid Edward Hubert, George
Hubert, Jr., Sharon Hubert, and Thomas $644,236, $894,236,
$644,236, and $397,342, respectively.
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Last modified: May 25, 2011