Investment Research Associates - Page 193




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         between entities with no documentation to establish a rationale               
         for such transfers.  He created phony loans that were eventually              
         written off, and then he or the corporations took bad debt                    
         deductions to offset additional income.                                       
              Similarly, Lisle, Ballard, and Kanter failed to recognize                
         any separate identity of Carlco, TMT, and BWK, Inc.  Petitioners              
         assert that Lisle, Ballard, and Kanter were only the respective               
         managers of the assets of Carlco, TMT, and BWK, Inc., and claim               
         that the preferred stock issued to their family trusts had                    
         minimal value.  The record clearly shows, however, that                       
         petitioners' control over the assets of the corporations went far             
         beyond that of a manager.                                                     
              Petitioners used the funds for their personal benefit.  From             
         1984 to 1986, Ballard transferred $16,599 to himself that was                 
         recorded as a receivable on TMT's books.  In 1987, Ballard                    
         transferred the St. Francis Arkansas land owned by TMT to himself             
         and recorded the transfer as a sale.  He did not pay for the land             
         but recorded a receivable of $100,000 as owed by him on TMT's                 
         books.  In 1987, TMT funds also were used to pay $20,344 to the               
         Fairfield Plantation Company, Ballard's S corporation.  The                   
         payment was recorded as a receivable owed by Ballard.  In 1989,               
         Ballard distributed $10,000 to himself from TMT and increased his             
         receivable to $146,943.  In addition, Ballard distributed                     
         $160,000 of TMT's funds to his wife, $122,900 to the Seabright                






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