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Asian investors. At that time, the real estate experience of
petitioner’s father consisted of the ownership of a 7-Eleven
franchise for approximately 22 years and the purchase and sale of
two commercial properties and his personal residence.
The proposed arrangement was for petitioner’s father to
locate potential real estate investments and advise petitioner on
their profitability. Petitioner’s father agreed to drive around
Southern California and assist in locating investment
opportunities. In exchange, petitioner orally agreed to pay2
petitioner’s father $30,000 annually for his services.
C. Maintenance of Records
In December 1996, petitioner opened a checking account with
Bank of America (Bank of America account). The Bank of America
account was petitioner’s personal account. During the same
month, petitioner’s father received a check drawn from
petitioner’s Bank of America account in the amount of $30,000.
At this time, petitioner’s father did not have a checking
account. Therefore, in January 1997, petitioner’s father asked
Mark M. Hathaway (Mr. Hathaway), his tax attorney and C.P.A., to
deposit the check in Mr. Hathaway’s client trust account (trust
account). From the trust account, Mr. Hathaway made payments as
2 We use the words “pay,” “paid,” and “payment” in our
findings of fact for convenience only. We do not intend our use
of these terms to indicate any conclusion about the substance of
the transactions at issue.
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