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Through Corman, petitioner knew other individuals who were
investors in Mid Continent. Before investing in the partnership
in 1983, petitioner discussed with other investors the nature of
"their involvement with Mid Continent". Petitioner "looked into"
the activities of the partnership in 1981 and 1982 by reading
accounting reports. On the basis of the discussions with other
investors and the recommendations of Corman, petitioner
considered the purchase of Fields' interest in the partnership to
be "reasonable".
The Deal With Fields
When Fields invested in the Mid Continent partnership in
1981, he agreed to make an initial cash payment of $10,000 and to
make subsequent $10,000 cash payments in each of the years 1982
and 1983. Fields also agreed to become liable on a $120,000
"obligation" to Mitchell Petroleum Technology Corp. (Mitchell)
that was to become due 13 years later, on January 15, 1994.
During petitioner's negotiation with Fields over the purchase of
his Mid Continent partnership interest, it was agreed from the
beginning that petitioner would pay the last $10,000 cash capital
contribution. But the negotiation focused on "What the amount of
the investment was that we were to receive in terms of the value
of the balance of the due--the amount that was still due" on
Fields' obligation to Mitchell. They discussed whether Fields
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