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During those years the Kanters' personal residence was
titled in the Egondale Trust, a grantor trust of Kanter. Through
the Egondale Trust, Kanter paid the home mortgage interest and
real estate taxes on the personal residence, using funds from his
Administration Co. special E and the Principal Services special
accounts.
On Schedule A of the Kanters' 1986 Federal income tax
return, a deduction of $368,227 was claimed for other interest
expenses.
On the Schedules A and the Schedules C of their respective
1987, 1988, and 1989 Federal income tax returns, the following
deductions were claimed:
Schedule A 1987 1988 1989
Charitable contributions -- $61,555 $23,747
Home mortgage interest $123,936 135,596 173,587
Investment interest 6,500 170,993 309,880
Medical expenses -- 994 --
Miscellaneous expenses 7,805 36,837 30,378
Real estate taxes 53,031 66,646 57,384
State & local income taxes -- 29 1
Total 191,272 472,650 594,977
Schedule C 1987 1988 1989
Bank charges -- -- $48
Dues & publication expenses -- $2,328 2,878
Legal & professional expenses $44,476 -- --
Office expenses -- 26,892 --
Utility & telephone expenses -- 4,252 3,343
Total 44,476 33,472 6,269
In the notice of deficiency for 1986, respondent determined
that no deduction was allowable to Kanter for the $368,227
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