In 1965, he began discussing possible real estate transactions with Sunset International Petroleum Corporation (Sunset), a publicly-held corporation whose primary business activity was real estate development. Sunset was anxious to generate gains from real estate sales for financial reporting purposes, such gains being offset for tax purposes by loss carryforwards and deductions for depletion and intangible drilling costs relating to Sunset's petroleum business. At the same time, Sunset wanted to maintain a continuing interest in the future development of any undeveloped land that it sold.