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lights, paintings, and a podiatry wall cabinet with supplies.
The purchase agreement failed to specifically indicate what the
office and workroom items were, or the type of furniture. The
purchase agreement did not allocate a fair market value (FMV) to
each piece of property included in the intangible assets or
medical equipment.
Dr. Karason testified he did not have the funds to purchase
Dr. Flom’s practice. To finance the transaction, petitioner
obtained a $30,000 bank loan from The Farmers Savings Bank
(Farmers Bank) on December 22, 2000, and wired it to his brother
on January 9, 2001. The loan was secured with rental property
owned by Karason Capital Partners (KCP), petitioner’s and Dr.
Karason’s partnership.2 The promissory note for the loan stated
the loan’s purpose was for “BUSINESS: PURCHASE MEDICAL PRACTICE”.
Dr. Karason’s solely owned corporation, Karason Podiatric
Centers, Inc. (KCPI), paid the monthly bank loan payments to
Farmers Bank totaling $16,662 in 2001.
2 For convenience, the Court uses the terms “partnership”
and “partner” without deciding whether a partnership existed.
The promissory note stated the loan was secured “WITH OPEN-
END MORTGAGE ON REAL ESTATE LOCATED AT 901 CO. RD. 801, ASHLAND,
OHIO 44805 CONSISTING OF 9.51 ACRES WITH HOUSE AND BUILDINGS”.
This property was listed as KCP’s rental property on its Forms
8825, Rental Real Estate Income and Expenses of a Partnership or
an S corporation, for 1995 through 1997 and 1999 through 2001.
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Last modified: November 10, 2007