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endorsed to I.D.S. does not appear on the 1975 CTC cash receipts
journal.
In 1976 petitioner wrote four checks to himself on the
Diesel Power Bank of America account in the total amount of
$265,000. Three of these checks in the total amount of $150,000
were endorsed for deposit to CTC or Zand personal accounts. The
1976 CTC receipts journal reflects these payments as a transfer
or loans from Diesel Power. There is no other documentary
evidence of loans in the record. The fourth check in the amount
of $115,000 was endorsed to Ray Prussing. Although there is no
documentary evidence of a loan at the time the check was
endorsed, Ray Prussing paid $115,000 to petitioner in 1977. The
1977 CTC cash receipts journal lists a deposit of $115,000 as a
Refund/Reimbursement.
F. Sale of Diesel Power Stock
In December 1977 petitioner sold the remainder of his Diesel
Power stock to Mr. and Mrs. Khalatbari for $6 million, $3,300,000
of which was paid as a downpayment to petitioner at that time.
The Shareholder Consent and Agreement to the sale states that,
prior to the sale, petitioner owned 40 percent of Diesel Power
stock, and that the Khalatbari family owned the remaining 60
percent. On petitioner's 1977 income tax return, petitioner
reported the sale of a 40-percent stock interest in Diesel Power.
Sometime after the sale of petitioner's Diesel Power stock in
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