-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'sPage: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011