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purchased the notes in question as a favor to Kanter. Kanter
sold the notes to MAF to enable him to realize a loss for tax
purposes. Kanter's testimony at trial as to the reason he "sold"
the notes (as well as the other securities at issue) is
paraphrased in his brief, as follows:
Throughout trial, Kanter candidly admitted that the
purpose of the asset sales was to "establish" a loss
for tax purposes, because of the traditional practice
of Respondent's agents to routinely propose to disallow
Section 165 or Section 166 deductions claimed in IRA's
or Kanter's tax returns.
Thus, by selling the various assets for a nominal amount, Kanter
was attempting to realize a loss by means of a sale or exchange
rather than as a bad debt or worthless security deduction. MAF
neither inquired into nor independently ascertained the value of
the purchased promissory notes. MAF did not look into or
consider a particular note's collectibility or the
creditworthiness of its maker or obligor. Specifically, during
1987, MAF purchased the Victorian Village and S. Block notes from
Kanter for $27,949 and $1, respectively, as an accommodation to
Kanter. After 1987 and up to the trial, Morrison continued as
president of MAF, although, since 1989, MAF has not been active
and has not conducted any business.
At all times relevant to this litigation, Windy City was a
corporation solely owned by the 25 Bea Ritch Trusts. Joel
Kanter, Kanter's son, was the president of Windy City. Weisgal,
a longtime friend and business associate of Kanter, was the
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