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Oak Street). The remaining 50-percent interest in 208 Oak Street
was acquired by Lance K. and Elizabeth A. Pugh (the Pughs).2
The purchase price for 208 Oak Street was $195,000.
Petitioner and the Pughs were each responsible for half of the
purchase price. In addition, petitioner and the Pughs agreed to
share profits and losses from 208 Oak Street equally.
Petitioner and the Pughs acquired 208 Oak Street to provide
a venue for a local theater company. A plan to transfer 208 Oak
Street to the theater company was abandoned for several reasons,
and petitioner and the Pughs decided to rent office space in the
property to a variety of month-to-month tenants.
At different times during 1992, petitioner and Pugh each
handled the management of 208 Oak Street. The management of 208
Oak Street was difficult and required a significant amount of
time. Petitioner and Pugh not only maintained books and records
and collected rent, but also performed maintenance tasks such as
fixing backed-up toilets and assisting tenants who were locked
out of their offices.
In 1991, petitioner and the Pughs purchased a second
property located at 310 Oak Street in Ashland, Oregon (310 Oak
Street),3 for $775,000. The main tenant in 310 Oak Street was a
2 References to Pugh are to Lance K. Pugh, and references
to Mrs. Pugh are to Elizabeth A. Pugh.
3 The properties located at 208 Oak Street and 310 Oak
(continued...)
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