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ley) under which: (1) Petitioners’ transfer of lot 12 to Edward
O’Malley pursuant to petitioners’ family subdivision agreement
was to be structured in the form of a sale;12 (2) Edward O’Malley
was to borrow from F&M Bank $180,000 ($180,000 loan), or 80
percent of the estimated $225,000 fair market value of lot 12,13
and was to secure that loan with that lot; (3) Edward O’Malley
was to transfer proceeds of the $180,000 loan to petitioners;
(4) petitioners were to make all the payments to F&M Bank re-
quired by the terms of the $180,000 loan; (5) the balance of the
estimated $225,000 fair market value of lot 12 (i.e., $45,000)
was to be reflected as a loan from petitioners to Edward O’Malley
on which Edward O’Malley was not required to make any payments;
(6) petitioners were to pay all the expenses relating to lot 12,
including all real property taxes; and (7) Edward O’Malley was to
retransfer lot 12 to petitioners after a five-year period.
On June 14, 2000, pursuant to the agreement between Edward
O’Malley and Mr. O’Malley, petitioners executed a deed (June 14,
2000 deed) under which they transferred lot 12 to Edward O’Malley
12Edward O’Malley and Mr. O’Malley agreed to structure the
transfer of lot 12 as a sale because F&M Bank required such a
structure before it was willing to make a loan to Edward O’Malley
that was to be secured by that lot.
13An appraiser for F&M Bank estimated the value of lot 12 to
be $225,000.
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Last modified: November 10, 2007