Investment Research Associates - Page 126




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         respectively, to either IRA or Int'l Films.  CMB Cinema Ventures              
         no longer owed $250 to either IRA or Int'l Films.  Likewise,                  
         Ballard's and Lisle's grantor trusts' original "loans" totaling               
         $357,464 were no longer owed to IRA or Int'l Films.                           
              In 1987, Ballard reported $2,400,252 total income on his                 
         Federal income tax return.  Included in the $2,400,252 was                    
         $212,309 interest and dividend income and $1,018,367 capital gain             
         income.  In 1987, Ballard had the resources to pay either IRA or              
         Int'l Films the "loans" owing by him and his grantor trusts.  In              
         1987, when IRA wrote off Ballard's "receivable" as worthless,                 
         Ballard did not report the discharge of this indebtedness as                  
         income on his 1987 return or on subsequent returns.                           
              In 1987, Lisle reported $746,923 total income on his Federal             
         income tax return.  Included in the $746,923 was $255,707                     
         interest and dividend income.  In 1987, Lisle had the resources               
         to pay either IRA or Int'l Films the "loans" that he had received             
         individually and through his trusts.  In 1987, when IRA wrote off             
         Lisle's "receivable" as worthless, Lisle did not report the                   
         discharge of this indebtedness as income on his 1987 return or                
         subsequent returns.  In 1988, the year after IRA wrote off loans              
         owing by Lisle and his trusts (RWL Cinema, RWL Cinema II, and                 
         Basking Ridge), IRA made another "loan" to the RWL Cinema Trust               
         in the amount of $6,000.  In addition, KWJ, Inc., or Kanter                   








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