- 229 - that should not be recognized as separate taxable entities. In the event the Court decides that the corporations were not sham or dummy corporations, respondent argues in the alternative that petitioners are taxable on the income under the assignment of income doctrine or pursuant to section 482. Petitioners, on the other hand, dispute respondent's characterization of such payments as kickbacks and their attribution to Kanter, Ballard, and Lisle. Petitioners deny that any kickback schemes existed and contend that the payments from the Five were properly taxable to IRA, Holding Co., or one of their subsidiaries. Petitioners contend that all of the payments were reported on the respective tax returns of IRA and Holding Co. during the years at issue and that such income was properly taxable to IRA, Holding Co., and/or their subsidiaries, and not to Ballard, Lisle, and/or Kanter, as respondent asserts. Petitioners contend that the corporations were not shams and that the assignment of income doctrine and section 482 are inapplicable. II. Omitted Income Since all of the payments by the Five were made to entities associated with and controlled by Kanter, and, from there, the payments flowed through to Kanter, Ballard, and Lisle, it is appropriate to consider first whether the payments made to Kanter's entities are attributable to petitioners, because if wePage: Previous 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 Next
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