Estate of Austin Korby - Page 18

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               We accept Mr. Kenworthy’s testimony that money managers                
          generally earn 1- to 1.5-percent management fees.  However, the             
          record shows that although KPLP held approximately 60                       
          investments, Austin made only 6 sales or purchases between 1995             
          and 1998.  Dennis testified that few trades were made because his           
          parents had low bases in the investments, and KPLP would                    
          recognize significant income if they were sold.  Given the plan             
          to hold the investments in order to avoid tax, the degree of                
          anticipated management of those assets would have been minimal.             
          The only other management activity the estate claims Austin                 
          undertook was reading newspapers and periodicals daily.  The                
          living trust continued to receive the purported management fee              
          income and use it to pay the Korbys’ expenses even after Dennis             
          took over most of Austin’s duties managing KPLP’s assets in                 
          February 1997, as reported in the minutes of the partnership.               
          During their lives, Austin and Edna never reported self-                    
          employment income from their purported management income; only              
          after their deaths was the income treated as self-employment                
          income, on an income tax return filed by Dennis.  While we                  
          believe that Austin was skilled at managing his portfolio, the              
          amount of work and time he committed to managing KPLP’s assets              
          did not rise to the level that an independent money manager might           
          have committed, and KPLP’s assets, under Austin’s own plan to               
          avoid recognition of gain, required little management.  While the           

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