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Trust, $10,080 to the Seabright Corp., all recorded as
receivables. Ballard distributed $19,000 to Ficom (Melinda
Ballard's sole proprietorship) that TMT later wrote off as a
worthless investment. Ballard and his wife referred to farms
owned by TMT as their farms.
Kanter took $400,000 out of BWK, Inc. and recorded the
distribution as a receivable. Lisle used $3,000 of Carlco's
funds to pay a receivable on the books of Administration Co. The
payment did not create a receivable on Carlco's books.
When receivables were recorded for funds taken out of the
corporations, there was no intention or expectation that the
funds would be repaid, and there was never any attempt to collect
the receivables until the IRS began auditing petitioners'
returns.
Petitioners used the corporations' partnership, KWJ Co., to
distribute money to the Ballard and Lisle children in the guise
of consulting fees. The children never performed any services
for the payments.
Petitioners maintained possession of the corporations'
assets and records. The addresses given for Carlco and TMT were
the addresses of Lisle's and Ballard's residences. When Lisle
lived in Connecticut, the records were maintained in Connecticut;
when he moved to Texas, the records and accounts were maintained
in Texas.
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