-37-
Issue I. Whether Kanter, Ballard, and Lisle Earned and Are
Taxable on the Income in Dispute
FINDINGS OF FACT (STJ report at 14)
With respect to the issues in dispute, the parties filed
several stipulations of facts.20 The facts reflected in these
stipulations, with the annexed exhibits, are so found and are
incorporated herein by reference.21
At the time the petitions were filed, the Kanters’ legal
residence was in the State of Illinois, the Ballards’ legal
residence was in the State of Florida, and the Lisles’ legal
residence was in the State of Texas. The independent coexecutors
of the Estates of Robert W. and Donna M. Lisle, Amy L. and Thomas
W. Lisle, were also legal residents of the State of Texas at the
time they were substituted as representatives of the Estates of
their deceased parents.
20 The STJ report does not contain any recommended findings
of fact regarding the examination process and related summons
enforcement proceedings that preceded the trial in these cases.
These matters are relevant to the question of whether Kanter and
Ballard are liable for additions to tax for fraud and are
addressed in detail in additional findings of fact, infra pp.
213-222.
21 Unless otherwise clear from the context, the following
words, their derivatives, and related terms are used for
narrative convenience only to describe the forms of the various
transactions in dispute in these cases: “invest”, “purchase”,
“borrow”, “pay”, “distribute”, “promise”, “loan”, “sale”, “note”,
“agreement”, “obligation”, “interest”, “capital contribution”,
“paid-in capital”, “officer”, “director”, “shareholder”, and
“partner”. By our use of such terms, we do not mean to suggest
any conclusions concerning the actual substance or
characterization of the transactions for tax purposes.
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