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Furthermore, there is no evidence that the commissions,
consulting fees, officer's fees, or director's fees were properly
characterized as such payments or paid for services provided to
the corporations. For example, petitioners assert that Ballard
was never a director of IRA and that the $12,500 payment to
Ballard was not in fact a director's fee. KWJ Corp. and KWJ Co.
partnership paid Ballard's and Lisle's children consulting fees,
yet the children never provided any services for the payments.
Additionally, there is no evidence that any of IRA's income
was attributable to Schott's real estate activity. Schott could
not remember exactly what she did for IRA. She merely signed
documents without any real knowledge of the transactions
involved. When IRA redeemed Schott's 500 shares of IRA class B
preferred stock in 1983, IRA no longer qualified to hold a
corporate broker license.
The payments of development fees from Frey and the BJF
partnership were not related to any investment IRA and Holding
Co. may have made in any of Frey's condominium conversion
projects.
We conclude that the corporations did not carry on
substantial business activity in the ordinary meaning.
Finally, even if we were able to find some modicum of
business activity, petitioners and other parties to the various
transactions did not recognize any of the corporations or
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