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section 1202) in the amount of $64,694;4 net rental income in the
amount of $33,073; and other income (consisting principally of
rental management fees and director’s fees) in the amount of
$16,006. In addition, petitioner had equity interests in: (1) A
partnership known as M&W Construction;5 (2) a partnership known
as Canyon Crest Lots; (3) a partnership known as The Attic; (4) a
partnership known as The Thrift Land Company; (5) a partnership
known as Sovereign Land Company; (6) San Nicholas, Ltd. (see
infra “E” through “K”); (7) two parcels of commercial real
estate; and (8) an S corporation.
Prior to 1983, petitioner had an interest in a family-owned
ranch. The ranch, which was located in northern California, and
grazed about 250 head of cattle, was operated on a day-to-day
basis by petitioner’s father, who lived in the area. The ranch
was sold in November 1980.
B. Petitioner’s Friend and Associate William G. Kellen
William G. Kellen (Mr. Kellen) was petitioner’s friend and
business associate. Like petitioner, Mr. Kellen was a member of
the board of directors of Riverside Thrift & Loan Association.
4 Petitioner’s capital gain included an installment sale in
March 1983 of 69,971 shares of Riverside Thrift & Loan
Association at a gross profit of $265,844.
5 Petitioner’s share of partnership income from M&W
Construction in 1983 was $6,307. This income is apparently the
basis of petitioner’s testimony that his livelihood in 1983 was
based, in part, on “some contracting”.
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