-164-
payments of principal and interest), and (5) $164,588 from
Eulich/Essex Partnership, for a total of $5,056,929.
Before 1984, all payments that IRA and its subsidiaries
received from The Five in connection with the Prudential
transactions described above were reported on IRA’s consolidated
returns. No tax was paid on this income because, during 1978
through 1983, IRA reported substantial net operating losses. See
Table 1, supra p. 48.
2. Payments Made During 1984 to 1989
After 1983, Kanter altered the structure for the receipt of
payments from The Five. Although Hyatt continued to issue checks
payable to KWJ Corp., IRA (which purchased KWJ Corp. in 1979)
liquidated the company in December 1983. At the same time,
Carlco, TMT, and BWK formed the KWJ Partnership, which began
receiving the Hyatt payments. Thereafter, the Hyatt payments
were no longer reported on IRA’s consolidated returns but were
reported on the respective returns of Carlco, TMT, and BWK in
accordance with their distributive shares (45/45/10 percent,
respectively) of KWJ Partnership items. Exhs. 61-66 (Carlco);
Exhs. 84-89 (TMT); Exhs. 106-111 (BWK).
In 1984, in connection with Lisle’s move to Travelers,
Schaffel made a final payment of $213,750 to IRA and then began
making payments to THC.
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