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question, and the loans that AMI made to Towers Development did
not increase petitioners’ stock bases in Towers Development.
We sustain respondent’s determination on this issue.
Issue 3. Treatment of Sale of Land Held in Joint Venture
Background
In 1983, Briggs, Mr. Morris, and Daniell agreed orally to
form a joint venture to develop and sell real estate in Panama
City Beach, Florida (the joint venture). Mr. Morris was to
direct construction, Briggs was to handle negotiations, and
Daniell was to handle sales. None of them put any money into the
joint venture. They agreed to share net profits equally, one-
third each. Because of previous credit problems, Mr. Morris
could not hold property in his individual name. Consequently,
Briggs conducted all transactions in his name both for himself
and for Mr. Morris.
As part of their joint venture, Briggs, Mr. Morris, and
Daniell worked together on at least three different projects–-the
CharBett Motel, a property known as Holiday Point, and Gulf
Highlands.
As previously discussed, in May 1985, Towers Development
bought the 60 acres of phase I land, and Briggs and Daniell
purchased the adjacent 40 acres in their individual names.
Ownership of the 40 acres was split two-thirds to Briggs and one-
third to Daniell, with Briggs and Mr. Morris agreeing pursuant to
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