-228-
the assignment was a sham inasmuch as the taxpayer attempted to
transfer his income to his alter ego (Ltd.). Id. at 920; see
Leavell v. Commissioner, 104 T.C. 140 (1995) (holding that
compensation paid by Houston Rockets to a wholly owned personal
service corporation of one its players was includable in the
player’s gross income).
Before proceeding, we shall first explain, as completely as
possible, why we have rejected as manifestly unreasonable certain
of the credibility determinations and associated legal
conclusions in the STJ report.
C. Errors in the STJ Report108
The STJ report was based on two fundamental misconceptions
regarding respondent’s position which resulted in (1) compelling
evidence largely being ignored, (2) credibility determinations
regarding The Five that were not relevant to a determination
whether a kickback scheme existed among Kanter, Ballard, and
Lisle, and (3) credibility determinations regarding Kanter,
Ballard, and Lisle that were manifestly unreasonable. A detailed
examination of the substantial record in these cases, along with
a review of the parties’ posttrial briefs, demonstrates that the
ultimate holding recommended in the STJ report, i.e., that
108 We observe at the outset that the STJ report is
organized in an unorthodox fashion. Although organized in
separate sections labeled “General Findings of Fact” and
“Discussion”, the Discussion portion of the report includes
findings of fact that are not contained in the General Findings
of Fact portion of the report.
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