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At the time the petition was filed, petitioner resided in
Pineville, Louisiana.
Background
Petitioner’s parents, Julian E. Long (Julian E.) and Alma
Kathryn Long (Alma), both of whom are now deceased (Alma in 1990,
Julian E. in 2005), operated LPP as a sole proprietorship in the
early 1950s. Initially, no one else worked in the business. LPP
sells janitorial and paper supplies.
LPP was incorporated under Louisiana law on December 31,
1975. From its inception through 1998, LPP had 100 shares of
stock issued and outstanding. Pursuant to its articles of
incorporation, those 100 shares constituted its total authorized
capital stock.3 Julian E. and Alma were the initial shareholders
of LPP. Shortly after its incorporation, LPP filed an election
with respondent to be treated as an S corporation. Respondent
accepted that election.
In 1964, petitioner’s brother, Julian W. Long (Julian W.),
began working on a full-time basis for LPP as a janitor. He
later worked as a delivery driver, a salesman, and, finally, a
manager. In early 1985, he became president of LPP.
3 The articles of incorporation do not specifically state
that those 100 shares of stock (the 100 shares) represent a
single class of stock with identical rights as to dividends or
distributions. The articles, however, do not state the contrary.
Also, petitioner’s argument that the allegedly disproportionate
distributions to Julian E. beginning in 1986 evidence the
creation of a second class of stock indicates her belief that the
100 shares constituted a single class of stock prior to 1986. We
think it a fair inference that the 100 shares constituted a
single class, at least until then, and we so find.
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