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unreported income adjustments in the notices of deficiency mailed
to Kanter for those years. The amounts paid by HCT to Holding
Co. for 1981, 1982, and 1983 were paid pursuant to an oral
agreement between Kanter, Hyman L. Federman, and the
beneficiaries of HCT by which Kanter or his designee was entitled
to receive 10 percent of the profits from the sale of assets of
HCT (the carried interest). Kanter does not dispute that the
amounts set forth in the notices of deficiency for 1981, 1982,
and 1983 were paid by HCT to Holding Co. pursuant to the carried
interest. Kanter claims that the amounts are not taxable to him
because, prior to the years in question, he allegedly assigned
the carried interest to Holding Co.
To the contrary, respondent contends that the evidence shows
that the payments from HCT to Holding Co. were in substance
compensation to Kanter for his services as trustee of HCT.
Kanter became trustee of HCT in 1972. He served as trustee of
HCT from 1972 through at least 1989. During the years in
question, Kanter, as trustee, performed substantial services for
HCT, as set forth in our findings of fact.
Because Kanter was not related to the Federmans and Kanter's
family members were not beneficiaries of HCT, we think it is
unlikely that Kanter would have performed the various services on
behalf of the trust without compensation. Kanter could not
establish that he received any trustee fees from HCT (other than
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