-203-
Lisle’s grantor trusts’ original loans totaling approximately
$357,000 were no longer owed to IRA or IFI. Exh. 34.
In 1987, Ballard reported $2,400,252 of total income on his
Federal income tax return, including $212,309 of interest and
dividend income and $1,018,367 of capital gain income. Exh. 391.
In 1987, Ballard had the resources to repay either IRA or IFI the
loans he had received individually and through his trusts.
Although IRA wrote off Ballard’s receivable as a bad debt,
Ballard did not report the discharge of this indebtedness as
income on his 1987 tax return or on subsequent returns. Exhs.
391-393.
In 1987, Lisle reported $746,923 of total income on his
Federal income tax return, including $255,707 of interest and
dividend income. Exh. 418. In 1987, Lisle had the resources to
repay either IRA or IFI the loans he had received individually
and through his trusts. Although IRA wrote off Lisle’s
receivable as a bad debt, Lisle did not report the discharge of
this indebtedness as income on his 1987 tax return or on
subsequent returns. Exhs. 418-421.
Neither Ballard, Lisle, nor their grantor trusts paid any
interest to IFI or IRA on the loans to them which were
subsequently written off as bad debts or sold for $1. Exhs. 383-
393, Exhs. 417-421; Exhs. 954, 955 (IFI returns). The record
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