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the borrower to repay the funds advanced. See Collins v.
Commissioner, 3 F.3d 625, 631 (2d Cir. 1993), affg. T.C. Memo.
1992-478.
There was no loan agreement between the various Kanter
entities and Ballard or Lisle. There was never any attempt to
collect on the receivables until after the IRS began questioning
the bona fides of the loans. By that time the loans had already
been written off as worthless. Even then Ballard and Lisle
denied that they had any obligation to repay. There is no doubt
that the distribution payments to Ballard and Lisle were not
loans.
Similarly, there is no doubt that the payments made by KWJ
Corp. and the KWJ partnership to Ballard and Lisle's adult
children were not for services rendered by the children.
From 1982, KWJ Corp. and the KWJ Co. partnership paid the
Lisle and Ballard children the following amounts as consulting
fees:
Lisle Children Ballard Children
Year Thomas Lisle Amy Albrecht Melinda Ballard Karen Hart
1982 $7,000 $7,000 $7,000 --
1983 12,000 12,000 12,000 --
1984 12,000 12,000 12,000 $2,000
1985 12,000 11,000 12,000 12,000
1986 12,000 13,000 12,000 12,000
1987 12,000 12,000 12,000 12,000
1988 12,000 12,000 12,000 12,000
During 1989, KWJ Co. paid the Lisle and the Ballard children
$36,000. Of the $36,000 paid to the children in 1989, Lisle's
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