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party and were subject to section 267, which disallows losses
between related parties.
Pursuant to Kanter's instructions, in late December 1987,
IRA purportedly sold the notes receivable to MAF for $1 each in
an attempt to establish worthlessness for the sole purpose of
claiming a loss for Federal income tax purposes. The notes
receivable had been recorded on the books and records of IRA but
were not evidenced by any written notes and were not secured by
any collateral.
During 1987, Morrison was the president of MAF, which was
located in Florida. Morrison had known Kanter since the early
1960's. He and Kanter were friends and had mutual clients.
Morrison became president of MAF at the request of, and as a
favor to, Freeman. Morrison received no compensation for his
services as president of MAF. His secretary, Sue Hutton, was
secretary of MAF.
During 1987, MAF purportedly purchased the notes receivable
from IRA for $1 each as an accommodation to Kanter. The
collectibility of the notes did not matter to MAF or Morrison.
At the time MAF purportedly purchased the notes from IRA, MAF
knew nothing about the financial condition of the alleged makers
of the notes.
MAF held some small investments. It ceased doing business
in the late 1980's. The last transaction engaged in by MAF was
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