- 448 -
In the notice of deficiency for 1987, respondent disallowed
the claimed basis in each of the assets reported sold. In
addition, respondent disallowed the claimed losses on the grounds
that the sales were to related taxpayers, the sales were not at
arm's length, were not entered into for profit, and the sales
prices were not at fair market value.52 Some of the sales were
to MAF, Inc. (MAF), and others were to Windy City, Inc. (Windy
City), except for the Rooney Pace bond, which was sold to Mallin
and the Brajdas Corp. stock, which was sold to an unrelated third
party. The Eagle, Freedom, and Lioness Partnership interests
were not sold to anyone. Kanter claimed a loss for these
interests on the basis of abandonment.
MAF was a wholly owned subsidiary of Computer Placement
Services, Inc. (CPS). The record does not show who legally or
beneficially owned CPS. MAF had no offices of its own and
operated out of the accounting firm office of Morrison, MAF's
president. Morrison, a certified public accountant, was a
longtime friend of Kanter and had accounting clients who were
also clients of Kanter. Freeman, who was IRA's president until
about 1988, had asked Morrison to serve as MAF's president.
Morrison received no compensation as MAF's president. MAF
52
In a Stipulation of Settlement filed by the parties,
respondent conceded adjustments relating to Sun Resorts and the
Lezak Group adjustments. Respondent, on brief, further conceded
the Newport Pharmaceutical and D. Anderson adjustments.
Page: Previous 438 439 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 NextLast modified: May 25, 2011