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benefit of the Levenfeld and Kanter law firm, respondent asserts
that the loans giving rise to the bonus payments were, in effect,
loans made by Kanter and his law partners. The Court, in Durkin,
made no such finding and, moreover, that was not a question for
us to decide in that case. In Durkin, the Court held that the
bonus payments did not constitute interest and, therefore, were
not deductible. The bonus payments were in the amount of 10
percent of the borrowers’ worldwide nontheatrical gross receipts.
They were not "compensation for the use or forbearance of money".
The bonus payments were not deductible because they were
distributions of profits disguised as interest. Distributions of
profits are not deductible. To conclude from such holding that
the loans were made by Kanter and his law firm partners (and not
Holding Co. and the other partners in CMS Investors) is a
misinterpretation of Durkin. Similarly, the payments were not
made for Kanter's services. If they had been, they would have
been deductible. There is no evidence to support respondent's
contention, as to this issue, that the true party at interest was
Kanter and not Holding Co. Therefore, we sustain Kanter on this
issue.
Issue 6. Whether Kanter had Unreported Income in 1983 From
Equitable Leasing Co., Inc.
FINDINGS OF FACT
In the notice of deficiency issued to the Kanters for 1983,
respondent determined that Kanter did not report income of
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