Estate of Concetta H. Rector, Deceased, John M. Rector, II, Co-Executor and Co-Trustee - Page 10




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          7. Operation of RLP                                                         
               RLP operated without a business plan or an investment                  
          strategy, and it did not trade or acquire investments.  RLP also            
          issued no balance sheets, income statements, or other financial             
          statements.  RLP’s partners did not hold formal meetings.                   
               RLP functioned to own investment accounts, to make                     
          distributions to partners, and to pay decedent’s personal                   
          expenses (directly during 1999 and indirectly in later years).              
          RLP maintained monthly statements of investment account activity,           
          including distributions, and a handwritten check register for               
          payments.  Statements of activity and capital accounts were not             
          regularly maintained.                                                       
          8. Summary of RLP Distributions                                             
               From its formation through December 11, 2001, RLP made                 
          distributions to its partners.  During each of 1999, 2000, and              
          2001, RLP’s total distributions to its partners exceeded RLP’s              
          annual net income by $491,480.  Of the total distributions, 86 to           
          90 percent were made to decedent during 1999 and 2000.  RLP’s               
          distributions to each partner represented the following                     
          percentages of RLP’s net income for each year:                              











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