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firm to value his interest therein, including the govern-
ment contracts that he had originated. In April 1988,
petitioner filed suit against the firm. On October 25,
1988, petitioner and the firm resolved their dispute.
Under the settlement, the firm agreed to pay petitioner
3 percent of the gross income realized by the firm during
the years 1989 through 1992. The firm also paid petitioner
$500,000 in October 1988.
After petitioner withdrew from the Houston firm, he
returned to Corpus Christi to engage in the practice of
law as a sole practitioner. During 1989, petitioner made
expenditures of approximately $300,000 with respect to his
law practice in Corpus Christi, of which approximately
$80,000 were for furniture and leasehold improvements.
Other Businesses
From 1984 through 1988, petitioner held an investment
in a cattle feeding business in Oklahoma that was operated
by Mr. Sam Gilmore. The business earned income or incurred
loss from the purchase and sale of cattle. Petitioner was
not directly involved in managing the business. He relied
on Mr. Gilmore to decide which cattle to purchase, how much
to feed them, and when to sell them. Mr. Gilmore operated
the business through a bank line of credit. Petitioner
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