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name the ranch “JAC Ranch”. Although the mortgage on the ranch
was in petitioner’s name alone, the deed to the property
reflected joint ownership by petitioner and Mrs. Corrigan. Mrs.
Corrigan used JAC Ranch as her primary residence beginning in
1986. Petitioner owned a home in Newport Beach, California,
which he used as his primary residence beginning in 1986.
Although petitioner and Mrs. Corrigan maintained separate
residences during the years in issue, they occasionally spent
time together in the same household.
During 1984, petitioner accepted a position as an account
executive at Prudential-Bache (Prudential). At Prudential, the
position of account executive was the equivalent of a senior
stockbroker. Petitioner was not a licensed stockbroker or dealer
in securities, and no license was required to act as a senior
stockbroker for Prudential. During 1984, Prudential lent
petitioner $390,000, which was evidenced by petitioner’s
promissory note to Prudential. Under the terms of the loan,
petitioner was required to make six annual $65,000 installments
with the first installment due July 1985. Petitioner made one
$65,000 installment, leaving an unpaid balance of $325,000.
Petitioner resigned his position at Prudential during August
1985 without repaying the outstanding $325,000 loan balance.
Prudential sought to collect the loan balance and submitted its
$325,000 claim to arbitration. Petitioner asserted several
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