-154-
the trusts was taxable to Ballard and Lisle pursuant to sections
671 through 678. The CMB, CMB II, RWL, and RWL II Trusts each
made investments, as limited partners, in certain movie shelter
partnerships. Kanter or Solomon Weisgal (the trustee of the Bea
Ritch Trusts that owned all of IRA’s common shares) was the
trustee of these trusts. Each Ballard and Lisle trust held no
assets other than its respective movie partnership interest.
Each trust financed the acquisition of its movie partnership
interest through a loan from IRA and International Films, Inc.
(IFI), a corporation in which IRA, at one time, was a majority
shareholder.78 In making loans to the trusts, IRA originally
provided the loan funds and received promissory notes from each
of the trusts; IRA then transferred these trust notes to IFI, in
exchange for IFI’s notes. The trust notes that IFI held, from a
practical standpoint, were collectible only if the movie ventures
78 The parties disagree as to whether these and other loans
to Ballard and Lisle, various trusts of Ballard and Lisle, and to
Mrs. Ballard were bona fide loans, and whether the parties to
these transactions actually intended the funds to be repaid. The
terms “loan”, “promissory note”, and other similar terms are used
herein for convenience and are not intended as ultimate findings
or conclusions concerning whether a bona fide indebtedness
actually existed. Similarly, the parties dispute whether certain
consulting payments that were made to Ballard’s and Lisle’s
children from 1993 through 1989, which are more fully discussed
infra, were in fact, compensation paid for the children’s
consulting work. The use of terms indicating that consulting
payments were made to the children should not be construed as
conveying any legal conclusion as to whether such payments
constituted compensation for services rendered.
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