Investment Research Associates - Page 337




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               1.  The I.R.C. Section 351 Exchange and Related Transactions            
               In order to avoid the realization (or recapture) of gains               
          resulting from the sale of the real estate partnership interests,            
          Kanter utilized Cashmere Investment Associates, Inc. (Cashmere),             
          a shell corporation and, on or about May 15, 1983, directed the              
          trusts to transfer their partnership interests into Cashmere in a            
          section 351 nontaxable exchange for stock.                                   
               Cashmere was incorporated on February 2, 1982, in Delaware              
          but had never been activated until the aforesaid transaction.                
          Cashmere's board of directors consisted of Meyers and Weisgal.               
          Cashmere's president was Weisgal, its secretary was Sharon                   
          Bayers, and its treasurer was Meyers.                                        
               The number of shares and classes of Cashmere's stock                    
          received by the trusts in exchange for their partnership                     
          interests were as follows:                                                   
                                                 Shares of Stock                      
                   Shareholder         Common Stock      Class A Preferred            
               BWK Revocable Trust            50              241.274                  
               Everglades Trusts 1-5         400              257.226                  
               BWK Family Trusts              30                --                     
               Holding Co.         520                --                               
               In order to offset the negative capital accounts of the                 
          partnership interests and to avoid the realization of taxable                
          gains that would result from Cashmere assuming liabilities (the              
          negative capital accounts), Kanter caused the trusts to transfer             
          to Cashmere on May 15, 1983, eight notes receivable (assets) held            






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