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On August 2, 1989, IRA issued checks in the amount of
$22,618.80 each to Ballard and Lisle. After the checks were
issued to Ballard and Lisle, IRA records reflected a transfer of
$45,237 to "KWJ Company" on August 8, 1989. Also on August 8,
1989, ledger entries reflected that the check to Lisle for
$22,618.80 was "void". Another ledger entry, on August 15, 1989,
reflected that the check to Ballard for $22,618.80 was "void".
Despite the fact that IRA's ledger entries stated that these
checks were void, Lisle's 1989 return reflected that he received
this money and that the check was not "voided." Lisle reported
the $22,619 on his return as income from the "KJW [sic] Company."
3. Disposition of Funds out of Carlco, TMT, and BWK to Kanter
a. Creation of Carlco, TMT, and BWK, Inc.
The certificates of incorporation of Carlco, TMT, and BWK,
Inc., authorized each corporation to issue 1,000 shares of 10-
cent par value common stock. Certificates of amendment for each
corporation were filed in December 1983. The amended
certificates authorized the corporations to issue 11,000 shares
of stock comprised of 10,000 shares of 1-cent par value preferred
stock and 1,000 shares of 10-cent par value common stock. The
amended certificates granted each corporation's board of
directors authority to fix the dividend rights, dividend rate,
conversion rights, voting rights, the rights and terms of
redemption (including sinking fund provisions), the redemption
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