-5-
Mr. Adkins did not contemplate transferring, nor did he ever
transfer, any interest in Tag Coal to either Mr. Templeman or
petitioner. Mr. Adkins retained his interest in Tag Coal because
he hoped that Tag Coal could recover the substantial amounts owed
to it by Commonwealth.
On August 30, 1984, petitioner issued a check in the amount
of $175,970.51 to Tag Coal for the purpose of permitting Tag Coal
to pay its outstanding employment tax liability. The memo entry
at the bottom of the check reads "Loan to Tag Coal Corp." The
amount advanced by petitioner was recorded as a loan payable on
Tag Coal's corporate books. Tag Coal used the proceeds from the
check to pay its employment tax liability. In a document styled
"Agreement" dated August 30, 1984, Mr. Adkins and Mr. Templeman
granted petitioner a "judgement without protest" against Tag Coal
for a "loan made to Tag Coal".
Petitioner considered himself to be an equal partner in J &
M on August 30, 1984; however, he did not terminate his
employment with Coal Mack at that time because Coal Mack had not
yet hired his successor. Petitioner did not want to leave Coal
Mack until his position had been filled. Thus, on August 30,
1984, petitioner was employed by Coal Mack and was simultaneously
performing services for J & M. Specifically, petitioner
negotiated contracts for J & M and supplied the contractors with
J & M's equipment.
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