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Kanter did not testify that Rappaport would include him as a
party in any litigation. He failed to present any proof of
damage to his business reputation. If anything, Kanter was
protecting his personal reputation, not his business reputation.
He reimbursed Rappaport for a portion of the losses as an
accommodation to two friends, after a deal he proffered failed.
Kanter argues that the cases of Milbank v. Commissioner, 51
T.C. 805 (1969), and Pepper v. Commissioner, 36 T.C. 886 (1961),
support the deduction claimed by him. Contrary to the facts
here, the taxpayer in Milbank was in the investment banking
business and consummated a loan transaction. When the
transaction failed, the taxpayer argued he was a guarantor of the
loan, which payment had a proximate relationship to his trade or
business as a financier or investment banker. Kanter, in
contrast, is not a banker or financier. In any event, he did not
show that he entered into this transaction with the intent of
making a profit. Kanter is a lawyer who was consulted on various
business matters. Kanter was not engaged in the business of
selling valuable artwork. He was not paid to find the investor
but merely directed his friend to another friend. Contrary to
the holding in Milbank, Kanter was not protecting his reputation
as a lawyer or investor but merely protecting his friendship with
Feigan and Rappaport.
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