-196-
same day as Lisle’s Basking Ridge Trust (June 3, 1980). We shall
refer to these various entities collectively as Lisle’s grantor
trusts and Ballard’s grantor trusts.
(iii). International Films, Inc.
International Films, Inc. (IFI), was incorporated in
September 1973. Exh. 955. As of August 31, 1986, IRA owned 71
percent of IFI’s voting stock. Id. IRA’s general ledger
reflected that its basis in its IFI stock was $65,000. Exh. 34,
at 7. At the end of 1987, CMB Cinema Venture also was an IFI
shareholder. Exh. 5932.
IRA lent substantial sums to IFI, and, as of January 1987,
IFI owed $507,708 to IRA. Exh. 34, at 2. As discussed below,
Ballard’s and Lisle’s grantor trusts borrowed substantial sums
from IFI to invest in IFI tax shelters.
(iv). Harbor Exchange Lending Operation
Harbor Investments, Inc., was incorporated on July 21, 1978,
and its stated business purpose was investments. Exh. 153, at
19. The firm’s name was changed in fiscal year ending August 31,
1980, to Harbor Exchange Lending Operation (HELO). Exh. 156, at
22. Active Business Corp. (Active) owned 100 percent of the
voting stock of HELO, and THC owned 100 percent of Active’s
stock. Exh. 156, at 12, 21. THC filed a consolidated return
with both Active and HELO for the fiscal years ending August 31,
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