-201-
MAF’s president as a favor to Freeman. Morrison, Transcr. at
4505, 4513, 4519. Morrison was a longtime friend of Kanter.
Morrison, Transcr. at 4518.
Simultaneously with the transfer of IFI’s receivables to IRA
(listed above), IRA sold 10 of the receivables (with a face value
of approximately $800,000) to MAF, Inc., for $1 per receivable or
a total of $10. Exh. 5911, at 6 (AJE 9, ll. 17-29); Exh. 5911,
at 9 (AJE 23, ll. 26-28); Exh. 34. The 10 receivables in
question were those of Safari Trust, CMB Cinema Trust, CMB Cinema
Trust II, RWL Cinema Trust, RWL Cinema Trust II, HGA Cinema
Trust, Elk Investment Partnership, Inter Alia, Hargen, and HELO
(the Basking Ridge Trust and Summit Trust notes). Exh. 5911, at
6 (AJE 9); Petitioners’ Reply Brief at 574.
Step 4
With regard to Ballard’s promissory notes (totaling
$196,648) and Lisle’s promissory note ($28,284), IRA’s adjusting
journal entries for 1987 reveal that IRA (1) substantially
discounted the value of these notes, as well as a small
receivable due from CMB Cinema Ventures (Exh. 5911, at 7 (AJE
12)), and (2) wrote off the balances, $84,889 due from Ballard
and $12,185 due from Lisle, as bad debts. Exh. 5911, at 10 (AJE
28, lines 15-19). IRA’s adjusting journal entry stated that this
transaction was undertaken “to write-off worthless notes.” Exh.
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