Daniel L. Reeves - Page 2

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               The issue for decision is whether petitioner received                  
          constructive dividends from a company in which he was the sole              
                                  FINDINGS OF FACT                                    
               The parties’ stipulation of facts and the attached exhibits            
          are incorporated herein by this reference, and the facts                    
          stipulated are so found.  At the time the petition was filed,               
          petitioner resided in Wilsonville, Oregon.                                  
          A.   Petitioner’s Background                                                
               In 1995, petitioner was the president, secretary, treasurer,           
          and sole shareholder of Vitamin Village, Inc. (VVI), and                    
          performed all of its managerial duties, including managing VVI’s            
          product research and development, production, sales, marketing,             
          and advertising.2  VVI, with a fiscal year ending (FYE) June 30,            
          was in the business of producing, distributing, and selling skin            
          care products, tanning lotions, diet aids, sports performance               
          products, nutritional supplements, health food products, and                
          apparel at both the retail and wholesale levels.                            
          B.   Petitioner’s Home and the Floating Structures                          
               On September 24, 1993, petitioner purchased 1.2 acres along            
          the Willamette River in Newberg, Oregon, which included his                 
          family residence and a dilapidated houseboat and a floating dock            

               2 Petitioner incorporated Universal Marketing, Inc. (UMI),             
          on June 1, 1995, to perform VVI’s branding, marketing, and                  

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