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so without reviewing or considering the documentation that
petitioners had regarding their respective investments. That
documentation indicated the following, all of which is
inconsistent with a conclusion that petitioners engaged in two
different Schedule C businesses during 1992:
(1) James’ investment was transferred directly to Quotum;
(2) in exchange for that investment, James received both
stock in Quotum and a promissory note. The stock was issued to
James’ closely held S corporation, Candid. James also became
president of Quotum and actively participated in Quotum’s effort
to acquire Russian airplanes;
(3) Quotum apparently never acquired any airplanes or
engaged in any business;
(4) at least part of the funds advanced by James was
expended on business expenses of Quotum, and, to the extent so
used, was not stolen, or reflective of a bad debt; and
(5) Christopher gave $150,000 to James after James had
already transferred $650,000 to Quotum’s account in Nordbanken.
Christopher gave that amount to James to invest in Quotum; he did
not use the money in his own trade or business. The record does
not disclose what James did with Christopher’s money.
The itemization above reflects only some of the factual
reasons why we conclude that, if research was done as
petitioners’ accountant testified, it was inadequate and
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