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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 we
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