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Lisle’s families) to ensure that (a) Carlco’s investments in
municipal bonds would not imperil IRA’s interest deductions, and
(b) no one at IRA (such as Freeman) would be able to second-guess
Ballard’s and Lisle’s investment decisions. None of these
assertions withstands serious scrutiny.
The record shows that (1) IRA acquired 1,000 shares of
common stock of Carlco, of TMT, and of BWK in December 1983, and
(2) Carlco preferred stock was issued to Christie Trust (Lisle’s
family trust), TMT preferred stock was issued to the Orient Trust
(Ballard’s family trust), and BWK preferred stock was issued to
the BK Children’s Trust (one of the Bea Ritch Trusts). The
record, however, is devoid of stock ledgers or related
information for these corporations after early 1984. Respondent
requested a comprehensive set of corporate records for Carlco,
TMT, and BWK; however, petitioners failed to produce such records
for the period after 1984. Although the paper record (stock
certificates) suggests that IRA owned a controlling interest in
Carlco, TMT, and BWK, the manner in which Kanter, Ballard, and
Lisle handled the assets that IRA transferred to those entities
(discussed supra pp. 178-194) indicates that, in substance, Lisle
owned Carlco, Ballard owned TMT, and Kanter owned BWK.
In 1984, Kanter directed IRA to transfer a substantial
portion of its cash on hand to Carlco, TMT, and BWK in a 45/45/10
percent split. IRA also transferred to Carlco, TMT, and BWK its
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