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1989 (1,331,576) –
Kanter paid no Federal income taxes for an 11-year period,
and only minimum tax in 1978 of $1,671. However, he did pay
self-employment tax for the years 1978 ($1,434), 1979 ($1,855),
1980 ($2,098) and 1983 ($3,338).
E. Examination of Petitioners' Returns
In November 1989, the Internal Revenue Service began an
examination of Kanter's income tax returns. Several years were
under examination.
In connection with the investigation of IRA for 1987, an IRS
agent received documents from Gallenberger and Kanter. The types
of documents which the agent received included financial records,
billings, invoices, expense items and various accounting records
and corporate records. The agent reviewed the records to
determine who the shareholders of IRA were in 1983. The records
indicated that the shareholders of IRA for the year 1983 were:
The Ballard Family Trust; The Lisle Family Trust; Weisgal as
trustee of the Bea Ritch Trust; and Schott. IRA's minute books
reflected that, as of 1984, the only shareholder of IRA was the
Bea Ritch Trusts.
Pursuant to a summons to testify, Ballard was interviewed by
IRS agents in February of 1990 at his residence in Florida. At
the time of the interview, Ballard was not under audit. Ballard
understood that he was not under audit and testified under oath.
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