-329-
In addition, as respondent points out, the compensatory
nature of the arrangement is confirmed by the trust’s tax
treatment of the payments to THC. The 1981 payment the trust
made to THC was deducted as a trustee’s fee, and the 1982 payment
was specifically characterized on the trust’s return as a
“commission”. Indeed, Kanter, as trustee, signed all the trust’s
returns. Although Kanter, in his testimony, denied that the
trust’s payments were compensation to him, he did not describe
what, if any, specific services THC had performed in exchange for
the trust’s payments. Kanter also offered no evidence regarding
the terms and conditions of his purported assignment of the
“carried interest” to THC.
The Court concludes the payments from Hi-Chicago Trust to
THC represented compensation to Kanter for his personal services,
and, as such, those payments are includable in Kanter’s taxable
income for 1982 and 1983 under the assignment of income
doctrine.132
132 On brief, petitioners argue that, even if the
arrangement was compensatory, Kanter realized taxable income only
in 1972, at the time he received the “carried interest”, not in
1982. This argument was not timely raised and, in any event, is
not persuasive.
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