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partners) held a 99.419-percent interest. Advance Leasing
borrowed money from HELP, and owed HELP $953,375 by the end of
1998.
E. The Stock Subscription Agreement and the $400,000 Promissory
Note
McBride knew it was important to decedent that Billy Hughes
always have a place to work. On April 29, 1997: (1) McBride,
acting under a power of attorney from decedent and as president
of Advance Leasing, signed a stock subscription agreement under
which decedent agreed to pay Advance Leasing $400,000 on demand
and Advance Leasing agreed to issue to decedent an additional
4,000 shares of Advance Leasing’s common stock; and (2) Advance
Leasing issued a stock certificate to decedent for the 4,000
shares. The terms of the stock subscription agreement were not
negotiated, and Advance Leasing’s business was not appraised.
The promissory note was not paid while decedent was alive.
Neither the $400,000 promissory note nor the 4,000 shares
were identified on Advance Leasing’s 1997 and 1998 financial
statements or on its 1997 and 1998 corporate income tax returns.
Neither Advance Leasing’s bookkeeper nor its certified public
accountant, whose accounting firm had prepared Advance Leasing’s
tax returns and reviewed its financial statements since the early
1990s, knew about the stock subscription agreement or the
$400,000 promissory note.
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