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mining at the University of Nevada bookstore. Petitioner also
learned how to read geological mining maps. Petitioner began
searching for gold and other precious metals on Federal land in
Clark County, Nevada. By 1979, petitioner began locating mining
claims near Searchlight, Nevada.
On March 5, 1980, petitioner formed Jetco Enterprises, Inc.
(JEI), a Nevada corporation. Although petitioner apparently
planned to conduct his mining activities through JEI at some
point, petitioner did not use JEI during the years at issue or in
prior years to report the results of his mining activities.
Instead, petitioner conducted his mining activities as a sole
proprietorship doing business as Jetco Mining.6 Over the years,
petitioner employed his two sons, his daughter, and an ex-
brother-in-law in his mining activity.7
6JEI, through and including the years at issue, did not file
Federal income tax returns. JEI, however, issued shares of
stock, held board meetings, kept minutes of corporate activities,
and otherwise observed all the formalities of a corporation. At
the time of trial, JEI was in good standing with the secretary of
state of Nevada. Petitioner is the sole shareholder and
president of JEI. Petitioner’s sons, L.R. Tinnell and Jaye E.
Tinnell, are secretary and treasurer, respectively. JEI’s fiscal
tax year ends Jan. 31.
7At the time of trial, petitioner still employed his two
sons in his mining operation.
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