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(3) the construction and operation of a portable “clean room”5
facility. Cilena maintained a business checking account, and
petitioner consistently disclosed the existence of Cilena on his
Schedule C. Petitioner never reported any income attributable to
the equipment leasing activity.
In October of 1990, petitioner and Raymond Cotter (Mr.
Cotter) entered into an oral agreement to commence business as
equal partners in “Aeternum”, a general partnership formed under
the laws of the State of California. On May 22, 1992, petitioner
and Mr. Cotter reduced the partnership agreement to writing and
specified that Aeternum had been in existence since October 3,
1990. The purpose of Aeternum was to “engage in the general
business of electronic device research and development,
computerized design, applied research, manufacturing and
consulting, and any other business agreed on by the majority of
Partners in writing.” Petitioner and Mr. Cotter were required to
contribute services to Aeternum but were not required to
contribute any initial capital. The partnership agreement
4(...continued)
processing equipment, microscopes and measurement systems, a
sputter deposition system, photolithography equipment, and
miscellaneous items.
5The portable clean room was a relatively small, mobile
structure containing equipment designed to conduct research in
the semiconductor field. The temperature inside the structure
was precisely controlled and clean-room filtered air was
circulated.
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