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Petitioner allegedly formed another proprietorship in 1991
named The Real McCoy (Real McCoy). Petitioner's testimony
surrounding the existence and operation of Real McCoy was
sketchy. We surmise, however, that petitioner had a plan to
build industrialized (i.e., prefabricated) housing, and Real
McCoy was conceptualized to engage in the actual manufacture of
the industrialized homes.
Petitioner took no formal steps to set up Real McCoy, and he
stated it was formed just in his mind. Petitioner also indicated
that he intended someday to create a formal structure, but that
in 1991 it was just an idea. Real McCoy did not generate any
revenue for petitioner and, ultimately, never manufactured
anything. Since 1991, petitioner said he took no steps to
establish Real McCoy as an on-going business because “the market
totally went dead”. Petitioner intended to use the accrual
method of accounting to report Real McCoy’s income and expenses.
Petitioner did not invest money into Real McCoy. He stated,
however, that, while wearing his Mack McCoy hat, he drafted
architectural plans (the plans) and “sold” them to Real McCoy for
$15,000. Petitioner indicated that the plans were a useful tool
to solicit potential investors because they allowed him to
demonstrate his product on paper. Petitioner valued these plans
at $15,000. Petitioner testified that he arrived at the above
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