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In the March 17, 2004, meeting with Agents Rans and Beach,
petitioner stated that he owned only the original dwelling on the
Rivercliff property and the barn. On September 9, 2004,
petitioner signed a memorandum of confirmation and agreement with
NCPL which stated that the original intention was to own the
Rivercliff property as a 50-50 joint venture between petitioner
and NCPL. After the notices of deficiency were issued,
petitioner’s story further evolved. He claimed he owned the
Rivercliff property and that the funds transferred to purchase,
develop, and operate the property were nontaxable loans.
Petitioner and Kumiko Talmage designed the new home on the
Rivercliff property, petitioner developed the property, and
petitioner occupied the property as his primary residence from
June 9, 1999, through the date of trial. Even after the
Rivercliff property was transferred, RFI purportedly hired
petitioners as caretakers for the property, allowing them to
reside in the Rivercliff property’s new multimillion-dollar home
and enjoy full use of the property. Despite all his machinations,
from the time petitioner purchased the Rivercliff property, he had
full use, control, and benefit of the property.
Petitioner’s explanations to respondent and his testimony at
trial with respect to the ownership of the Rivercliff property
were inconsistent and implausible and were created for the sole
purpose of misleading respondent, and the Court finds that
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