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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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