Stanley P. Zurn - Page 19

          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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