-214-
In connection with the Kanter examination, IRS agents
interviewed Lisle on January 10, 1990 (Exh. 2030), and Ballard in
February 1990. Lunk, Transcr. at 1040. After these interviews,
the IRS began to examine Lisle’s and Ballard’s tax returns.
It was during this period that (1) Kanter wrote to Ballard’s
and Lisle’s children and explained that he was terminating their
purported consulting agreements, (2) Ballard and Lisle began to
be paid for managing Carlco and TMT, and (3) Kanter began to
negotiate with Ballard and Lisle regarding the loans IRA wrote
off as bad debts in 1987.
During the examination process, Kanter, Ballard, Lisle, and
their associates failed to produce information the IRS requested
orally and/or through written information document requests.
Lunk, Transcr. at 1042-1050, 1059. Kanter produced only
documents related to Schedule A deductions under examination.
Lunk, Transcr. at 1056-1057; Dion, Transcr. at 832-835, 837-838.
Kanter, Ballard, and Lisle failed to produce records sought by
the IRS concerning their grantor trusts and other related
entities. Lunk, Transcr. at 1057-1058.
B. IRS Summonses
The IRS issued summonses to Ballard, Lisle, Schott, and
Gallenberger (in her individual capacity and as an officer of
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