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Kanter. It is clear that payments Schaffel made to IRA were in
part for Kanter's service of introducing Schaffel to Ballard and
Lisle, and that Kanter agreed to share the payments with Ballard
and Lisle in a 45-45-10 split.
Although it is also clear that the payments Schaffel made to
Holding Co. were for Kanter's prior service in introducing
Schaffel to Lisle, the record does not show that the funds flowed
through from Holding Co. to Lisle. The payments at issue do not
include the payments Schaffel made through FPC Subventure. Lisle
included 90 percent of the FPC Subventure payments in the income
reported on his returns. There is no evidence in the record that
Kanter otherwise agreed to share or did share the fees from the
Travelers transactions at issue here with Lisle. Thus, we find
that none of the payments were paid to Lisle for his services.
4. The Schnitzer Arrangement
In 1974, Schnitzer's holding company, Century, purchased
Schnitzer-PMS (Fletcher Emerson at the time) for $1.3 million.
The purchase price was based roughly on five times Fletcher
Emerson's pretax earnings of approximately $250,000.44 At the
time of the purchase, Schnitzer-PMS had been managing a
relatively small number of Prudential's commercial properties.
44
Walter Ross was senior vice president of finance of Century
Development Corp. at the time of Schnitzer's purchase of Fletcher
Emerson. Ross testified that it was customary in the industry to
base the purchase price of a service corporation such as Fletcher
Emerson on the pretax income of the company.
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