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translated into the recovery of payables owed Cities or the
judgment from litigation pursued against the prime contractor.
Initially, one of the documents provided that petitioner was
to receive a 50-percent profit from the Century project. That is
a strong indication that he was in a joint venture with Ms.
Jackson. At that point, petitioner had advanced about $167,000.
Subsequently, petitioner advanced several hundred thousand
dollars in addition to the $167,000, and he was assigned all MCM
progress payments by Ms. Jackson.
A case that also was beset by complexity caused by a
shortage of formal documentation is Stanchfield v. Commissioner,
T.C. Memo. 1965-305. In that case, the taxpayer had advanced
money that, ultimately, was used by a corporate entity in which
the taxpayer had no ownership. In that case, it was held that
the taxpayer was a venturer, and, additionally, he had lent money
to the venture.
One hundred thousand dollars of the $677,652 advanced here
is easily segregated as being for the machinery leased by
petitioner to Cities. The remaining $577,652, however, could be
divided between petitioner's capital investment in the joint
venture and his advances or loans. It is a paradox that the
early advances were evidenced by notes and that the later
advances were not. That inconsistency can be attributed to
several possibilities, including the need to keep petitioner's
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