Investment Research Associates - Page 385




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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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