Stanley P. Zurn - Page 18

          payments.  Ms. Jackson used that approach as an inducement for              
          petitioner to advance more funds into their joint venture by                
          providing him with ownership as security and rental income in               
          exchange for additional funding.  We note that the machinery was            
          worth about $100,000, the equivalent of about one-sixth of the              
          funds advanced.                                                             
               The substance of petitioner’s involvement with Ms. Jackson             
          and her corporation was to profit from obtaining government road            
          contracts.  Respondent’s position that petitioner was a passive             
          investor who advanced two-thirds of a million dollars with only             
          limited security and no stock ownership does not ring true.                 
          Respondent, concerning whether petitioner should be treated as a            
          creditor, refers to petitioner as a "white knight" who advanced             
          funds to Ms. Jackson and Cities.  It is difficult to imagine any            
          reason for petitioner’s substantial participation other than his            
          interest in the "pot" of profits at the end of Ms. Jackson‘s                
          promotional "rainbow" and the rent he was to receive from leasing           
          the machinery.                                                              
               Early in the relationship, petitioner was to receive 50                
          percent of the profits from the government road contract.  When             
          Cities' involvement in the government contract was canceled and             
          things began to deteriorate, petitioner was promised all of the             
          receipts from the government contracts--which, at that time,                

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