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did not know who possessed the books and records. When
respondent served a subpoena on Kanter for records of BRT, Kanter
produced various tax returns but did not produce requested
records related to the basis of assets. Weisgal testified that
he had a 3-year retention policy except that records related to
basis were kept until the applicable asset was sold. However,
neither Kanter nor Weisgal produced records related to basis that
were sought by respondent even though, under Weisgal's stated
policy, such records should have been available. The fact that
Weisgal did not maintain the books and records of BRT and the
fact that Kanter, rather than Weisgal, produced records is also
indicative of Kanter's control over BRT.
Kanter received loans from BRT. He owed $287,030 and
$1,311,430 to BRT in 1987 and 1989, respectively. Kanter did not
establish that these loans were for adequate consideration, that
the loans were adequately secured or that the loans were ever
repaid. He also indirectly borrowed money from BRT by borrowing
money from IRA and Holding Co., the stock of which corporations
was in whole or in part owned by BRT.
Section 674(a) provides that the grantor of a trust will be
treated as the owner of any portion of the trust whose income,
without the approval of an adverse party, is subject to a power
of disposition, exercisable by the grantor or a nonadverse party,
or both, without the approval or consent of any adverse party.
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