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alleviated the need for such financing. Consequently, respondent
argues that the loans were structured to create purported
payments of interest which were, in effect, payments to Kanter
and his law firm for legal services the Levenfeld and Kanter law
firm provided in connection with the movie syndications.
On brief, respondent argued:
Under the practice of LK (Levenfeld/Kanter) that
was established by Kanter, the opportunity to
participate in Delta and Alpha through CMS was offered
solely to the partners of LK to the extent of their
then existent partnership interests. In the case of
CMS, none of the LK partners took their interest
individually, but instead designated various entities
for the benefit of their families to take interest in
CMS that they themselves were otherwise entitled to.
Kanter made the decision to participate in CMS.
Although Kanter could have taken his interest in CMS
individually, Kanter directed that THC [Holding Co.]
take his interest in CMS.
Respondent further points out that the purpose of diverting
the bonus payments to CMS Investors, which flowed through to
Holding Co. and other entities, was the "improper avoidance of
income, gift and estate taxes" because Holding Co. had large
operating losses and, therefore, paid no income taxes on the
bonus payments received. It is also argued that, with respect to
all of the partners in Levenfeld and Kanter who participated in
the investment, 147 trusts were used as partners in CMS, all of
which, for one reason or another, avoided taxes the partners
individually would have been required to pay.
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