- 550 -
and that, at some point, Funding Systems came out of bankruptcy
and the note was worthless. On cross-examination, Kanter
testified that the note was thought to have a value of $20,000 at
the time it was "sold" to Holding Co. In fact, IRA received
repayments on the Funding Systems note totaling $24,500 on June
24, 1986. Kanter admitted that the sale price of the Funding
Systems note was not based on an appraisal, a legal opinion of
those involved in the proceedings, balance sheets of Funding
Systems, or any type of bona fide analysis. He stated that the
purpose of the "sale" was to establish a loss for tax purposes.
This testimony does not establish the value of the note at the
time of "sale".
With respect to the Tanglewood note, Kanter testified that,
by the time IRA wrote off the Tanglewood loan, "it was clear that
there would be no assets available to pay this particular
obligation," yet he purportedly paid $10,000 for the note. If,
in 1985, it appeared that there would be no assets from which to
collect the note, it was not explained why Kanter was willing to
pay $10,000 for the note. Moreover, Kanter's testimony that
there were no assets to repay this obligation is contradicted by
Tanglewood's repayment of $6,000 to IRA in February 1986. This
evidence indicates that the $10,000 sale price was an arbitrary
figure determined by Kanter that had no relationship to the fair
market value of the note in 1985. We also note that this is the
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