Petitioner received commissions from Encore in the amount of
$11,010 in 1984, and in the amount of $2,976 in 1985, with
respect to his 1984 master lease sales. Petitioner claimed
deductions in the amount of $9,164 and an investment tax credit
in the amount of $17,808 with respect to his participation in the
Encore program during 1984.
On September 12, 1986, the U.S. District Court for the
Eastern District of California permanently enjoined Mr. Collings,
as shareholder and president of Encore, from taking any action in
furtherance of the organization, promotion, advertising,
marketing, selling or offering for sale, any new or future
interest in the Encore master recording lease programs.
The Carter Company
Petitioner entered into an investment agreement with the
Carter Co. (Carter) on January 4, 1983. Carter held itself out
to potential investors as a company engaged in the medical
factoring business, purchasing medical accounts receivable and
insurance claims from doctors at a discounted rate. Petitioner
did advance funds to Carter under the investment agreement.
Petitioner claims to have contributed a total of $76,050,
however; the record is not clear as to the precise amount of
petitioner's investment. No security or collateral was given for
petitioner’s advances to Carter. Carter issued promissory notes
to petitioner in exchange for his contribution. Carter made
quarterly payments to its investors at a rate of 7 to 10 percent
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