-387-
4251, 4259, 4263. Because Cashmere held cash in the amount of
$498,500, $1,149,000 of the purchase price was allocable to the
partnership interests that Zell was interested in acquiring.
Exh. 9156, items 10(A); Exhs. 9157, 9164.
Zell was not interested in the Cashmere stock and would have
preferred to buy the partnership interests outright, but this was
the only way that Kanter would permit the sale. Exh. 9157;
Kanter, Transcr. at 4250, 4252-4253.
OPINION
A. The Parties’ Arguments
Respondent determined that Kanter received a net long-term
capital gain of $190,756 as a result of the transfers from his
grantor trusts to Cashmere. The notice of deficiency stated in
pertinent part: “It is determined that your grantor trusts had a
zero basis and negative capital account of $476,889 in the
partnership interests transferred. The transfer of other assets
to the corporation by the trusts has no bona fide business
purpose, was made only to avoid income tax, and, thus is ignored
for Federal income tax purposes.” Respondent further determined
that Kanter received a net long-term capital gain of $378,800 as
a result of his grantor trusts’ sale of Cashmere stock to Waco.
The notice of deficiency stated in pertinent part:
The installment sale by the trusts was a sale of
property to a related party (the first disposition).
The related-party purchaser disposed of the property
Page: Previous 377 378 379 380 381 382 383 384 385 386 387 388 389 390 391 392 393 394 395 396 NextLast modified: May 25, 2011