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payment. He named his employer on the mortgage application as TV
Cable de Leon (Cable Leon) in Leon, Mexico. He listed his
income, including salary and interest, as $30,000 per month.
Petitioner thought it would be a good idea to purchase lots
in the Dominion, build homes on the lots, and sell the homes. On
July 16, 1990, he purchased 31 unimproved residential lots in the
Dominion for $1,147,000, paying $248,229.21 as a downpayment to
Alamo Title Company (Alamo Title). In 1990, petitioner formed
Interservice, Inc. (Interservice), a Texas corporation, to assist
with his plans to build homes on the lots. Petitioner was the
sole shareholder of Interservice. Petitioner and Interservice
did not build homes on the lots. An Interservice ledger for the
year ended October 31, 1991, shows a sale of four of the lots for
$160,000.
In June 1990, petitioner and Gordon Sitton formed Monroy &
Sitton (M&S). M&S purchased cable equipment and shipped it to
petitioner's cable business in Mexico. For Federal income tax
purposes, M&S filed as an S corporation, and the returns showed
losses for 1990 and 1991. The losses were subsequently
disallowed pursuant to an agreement among M&S, petitioner, and
respondent.
Various documents named petitioner as the owner, president,
and main stockholder of Cable Leon. He is also named as the
owner of an administration company, a construction company, and a
real estate company. Petitioner prepared a "Statement of
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