- 345 -
assignment to Holding Co. He failed to show a clear
manifestation of an intention to assign the underlying
contractual right, as opposed to the payments, to Holding Co. and
also failed to show that Holding Co. paid any valuable
consideration for the claimed assignment. Moreover, even if
there had been a valid assignment of the carried interest, it was
Kanter who was the "tree" (not the carried interest) and the
payments to Holding Co. were the "fruit" of Kanter's services to
the trust. Thus, the alleged assignment by Kanter of the "fruit"
of the "tree" to Holding Co. would have been ineffective to shift
from him to Holding Co. the income tax liability on the payments.
Lucas v. Earl, 281 U.S. 111 (1930).
We conclude that Kanter failed to establish that respondent
erred in determining that he was taxable on the carried interest
payments made by HCT to Holding Co. during the years 1981, 1982,
and 1983. The facts clearly establish that the payments were
made as compensation for his services rendered to HCT. Kanter's
treatment of the carried interest is merely another attempt by
Kanter to disguise and shift his income.
Page: Previous 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 NextLast modified: May 25, 2011