Lawrence Robert Clifton-Bligh - Page 3

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               Stephen Swain and Steven Conway were shareholders in a small           
          investment bank named S.J. Conway & Company (SJC).  During 1987             
          and 1988, events occurred that made Mr. Swain want to “get out              
          of” SJC.  In February 1988, Mr. Swain and Mr. Conway reached an             
          agreement for Mr. Conway to buy out Mr. Swain’s shares of SJC               
          (agreement).  Mr. Conway agreed to make a staged payout to Mr.              
               Mr. Conway violated the agreement by failing to make                   
          payments.  This caused an acceleration of the payout.  Mr. Swain            
          “pressed” Mr. Conway for the money he was owed.  On September 9,            
          1988, Mr. Conway paid Mr. Swain in full.  Mr. Swain did not see             
          any documentation regarding where the money Mr. Conway paid him             
          came from.                                                                  
               Deductions are a matter of legislative grace, and petitioner           
          has the burden of showing that he is entitled to any deductions.2           
          Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440           
          Alleged Investments                                                         
               Petitioner claims:                                                     
                    (1) He was approached by Mr. Conway to make an                    
               investment in SJC; in September 1988 he invested                       

               2  The record does not establish when the audit in this case           
          began, and petitioner does not argue that sec. 7491 applies to              
          this case.                                                                  

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