-5-
container as well as yield a profit, he understood that if the
monthly earnings from the container rental were insufficient to
meet monthly expenses, he would be required to pay the difference.
Petitioner never saw or possessed the container.
Petitioner received periodic statements from FoodSource with
respect to his interest in the container that purported to show
rental revenues generated and expenses incurred. He eventually
discovered that the revenue information contained in these
statements was false.
Petitioner made three payments in 1984 to FoodSource totalling
$2,655.95 for 1984. The purpose of these payments is unknown.
In 1990, petitioner was notified that the Budd Co. had
possession of his container,6 and that the Budd Co. was planning
to sell it. The Budd Co. offered to sell the container to
petitioner and Mr. Tom Ream (the other 50-percent interest holder)
for $22,000. Neither petitioner nor Mr. Ream chose to accept this
offer. Eventually, the container was sold at auction.
FoodSource filed for bankruptcy in 1984. In 1990, petitioner
paid $25,000 on his recourse note to FoodSource’s trustee in
bankruptcy.
Closing Agreement
On their tax returns for 1979, 1980, 1982, and 1983,
petitioners claimed credits, deductions, and losses with respect to
6 The record is devoid of any evidence as to why the Budd
Co. possessed the container at that time.
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