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the convoluted series of exchanges in which these entities
participated and in particular, the purported transfer of notes
receivables to the grantor trusts prior to the section 351
exchange with Cashmere. The primary reason for activating
Cashmere and utilizing its stock was to avoid the taxation of
capital gains realized by a purchaser's assumption of partnership
interests which had negative capital accounts (representing money
owed to the partnerships by the partners). Additional tax
motivations are also apparent, namely, in Kanter's attempted
deferral of the recognition of gain by applying the installment
sale provisions, while at the same time receiving immediate cash
payment for the interests (in excess of $1 million paid to his
controlled entity, Waco).
The entire plan for selling the partnership interests to
Zell and Lurie took place between May 15 and September 2, 1983.
In that "3�-month period," the Cashmere stock was transferred
three times (to Kanter's grantor trusts, to Waco, and to Equity
Financial). With the exception of Equity Financial, each of the
entities involved was controlled by Kanter. Cashmere engaged in
no other activities before, during, or after that limited period
of time.
Equity Financial purchased the stock of Cashmere from Waco.
Cashmere’s assets consisted of $498,000 cash which Cashmere
acquired from the purported payments of the notes by
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