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him, he would have been misappropriating NIOC funds by depositing
them into a Diesel Power account. Therefore, we conclude that
petitioner was simply using the Diesel Power Account to receive
the 1975 Ashland funds he had earned.
We conclude that petitioner earned Ashland's 1974 and 1975
payments to All Patents and, therefore, such payments constitute
his income.
With regard to Ashland's 1976 payment in the amount of
$265,000 attributed to Diesel Power on the CTC receipts journal,
the evidence as previously discussed shows very little
involvement in Ashland matters by Diesel Power. Petitioner
testified that the 1976 payment was for his services in obtaining
the release from All Patents. While both an Ashland witness and
petitioner stated that Ashland also met with Mr. Khalatbari and
I.J. Zand on several occasions, there is no indication that
either Mr. Khalatbari or I.J. Zand believed that Diesel Power was
Ashland's representative. To the contrary, Mr. Khalatbari and
I.J. Zand believed petitioner was Ashland's representative. The
documentary evidence also shows a significant amount of
correspondence between petitioner and Ashland representatives;
yet, there is no correspondence in the record between Ashland
representatives and either Mr. Khalatbari or any other Diesel
Power employee. Hence, in our judgment, petitioner was the
primary (if not the only) independent participant in the Ashland
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