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forgiven, those amounts represent income that reduces dollar for
dollar any amount used in computing the NOL. Thus, whether the
amounts that Mr. Trudell and Mr. Coghan contributed were loans
that were forgiven,13 or amounts those parties invested in the
project, petitioners have not established that they paid those
amounts into the project.14 As such, petitioners have
substantiated $1,812,799.9815 as amounts that they paid into the
land purchase.
2. Costs in Selling 3 and 9 Isabella
Petitioners substantiated to our satisfaction that they
incurred $60,634.76 in closing and settlement costs with respect
to the sale of 3 Isabella. The record also reflects that
$100,000 was paid to Mr. Trudell to release his lien with respect
13We have given Mr. Assaad credit for the $100,000 that was
paid to Mr. Trudell. See infra.
14One of respondent’s primary contentions on brief is that
Mr. Assaad and Mr. Trudell, and perhaps Mr. Coughan, were engaged
in a partnership and that petitioners have not shown that the
costs and losses resulting from the Atherton houses belonged to
them as opposed to other partners. Although there is some
evidence in the record which might suggest a partnership between
Mr. Assaad and Mr. Trudell, the evidence is not sufficient for us
to conclude that there was a partnership. Further, there is no
basis in the record for allocating the costs and losses to the
other alleged partners and for making adjustments, if any, to the
amounts realized from the sale and foreclosure of the Atherton
properties.
15This amount is equal to the $1.46 million land loan plus
the $422,397.50 deposit or earnest money, plus the $130,402.48
credit for the amount paid before escrow plus the $200,000
deposit retained, and minus the $400,000 received from Mr.
Trudell and Mr. Coghan.
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