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in Rev. Rul. 69-482, 1969-2 C.B. 164, is that these payments are
capital gains; we therefore treat respondent's position in Rev.
Rul. 69-482, supra, as a concession that the Leas are entitled to
report the payments as capital gains. (3) Whether Cascade or Lea
is liable for an accuracy-related penalty. Because of our
disposition of the preceding issues, we need not address this
issue.
FINDINGS OF FACT
Some of the facts in this case have been stipulated and are
so found. The stipulation of facts and the accompanying exhibits
are incorporated into our findings by this reference. Cascade is
a C corporation, whose principal place of business was in
Seattle, Washington, at the time it filed its petition in this
case. At the time they filed their petition in this case, the
Leas resided in Seattle, Washington.
Lea is a mechanical engineer and was continuously employed
by the Boeing Co. (Boeing) from 1948 to 1971. In mid-1971, Lea
was laid off from Boeing until late 1972. While he was laid off,
Lea began to investigate products that he could invent,
manufacture, and sell. Lea's friend and fellow engineer, John
Burroughs (Burroughs), suggested that there was a need for a
better sleeping pad for hikers and mountain climbers than was
being produced. Lea, with the help of another friend, Neil
Anderson (Anderson), designed a high-quality foam-filled self-
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