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documents for any transactions appearing on Blount's tax returns.
Blount considered Phoenix to be a high-risk investment.
3. Morton and Carol David
Petitioners Morton and Carol David (the Davids) resided in
New York, New York, when their petition was filed. Morton David
(David) received a B.A. degree from City College of New York in
1956 and a J.D. from Harvard Law School in 1961. From 1961
through 1963, David was an assistant to the special trial counsel
of the American Stock Exchange. He then practiced corporate law
at the law firm of Cooper, Ostrand, Devarco & Ackerman from 1963
until 1967. David has not practiced law since then. Instead,
David has engaged in the business of workouts and turnarounds of
technology companies, including a small cable television company,
a burglar alarm company, a military contracting company, an
electronics company, and a computer company. On their joint 1982
Federal income tax return, the Davids reported gross income from
wages, interest, dividends, State and local tax refunds, and
capital gains in excess of $750,000.
David acquired a 2.538461-percent interest in SAB Recycling
for a gross investment of $25,000 in 1982, without taking into
consideration any sales commission rebate or advance royalty
distribution. As a result of his interest in SAB Recycling, on
their joint 1982 Federal income tax return the Davids claimed an
operating loss in the amount of $19,871 and investment tax and
business energy credits totaling $41,320. Respondent disallowed
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