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evaluating the investment potential of Skylane Apartments. At
the same time, petitioner also considered different options for
obtaining real estate financing in Texas. Shortly thereafter,
petitioner traveled to Houston to visit Skylane Apartments.
On June 9, 1990, petitioner signed an "Earnest Money
Contract" (the Earnest Money Contract) to purchase Skylane
Apartments for $10,200,000. Petitioner did not pay any money to
Mr. Suiter upon execution of the Earnest Money Contract.
The Earnest Money Contract provided that the closing for the
sale of Skylane Apartments was to occur on or before August 8,
1990, 60 days after the Earnest Money Contract was signed. If
the closing for the sale did not occur by that time, then the
Earnest Money Contract provided that the parties would be
released from the agreement. In addition, the Earnest Money
Contract was subject to the purchaser obtaining financing.
At the time that the Earnest Money Contract was signed,
petitioner knew that real estate market conditions in Texas were
poor and that it would be difficult to obtain financing for the
purchase of Skylane Apartments. Although petitioner pursued
several different financing options, petitioner was unsuccessful
in obtaining financing by August 8, 1990, and the sale of Skylane
Apartments did not close. Thus, the Earnest Money Contract
expired on August 8, 1990.
Shortly after its expiration, petitioner requested that the
Earnest Money Contract be reinstated without changes and the
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