-398-
Kanter was counsel of record for the taxpayers in Estate of
Cook and was the trial attorney before this Court. Since Kanter
was an investor in IRC, he had offered himself as a witness for
the taxpayers at the trial of the Estate of Cook case. The Court
did not allow Kanter to testify, however, because he was the
trial attorney for the taxpayers. In the instant cases, Kanter
was not the trial attorney and was before this Court as a party
litigant and, therefore, he was allowed to testify as a witness.
For present purposes, the Court recites the pertinent facts
from Estate of Cook. Kanter contends the Court’s holding in
Estate of Cook is in error. A more detailed and comprehensive
findings of fact can be found in the reported opinion of Estate
of Cook.
During 1979, Kanter and three other individuals (including
George Cook, whose estate was the taxpayer in Estate of Cook,
invested in IRC. None of the stockholders in IRC, including
Kanter, had any formal educational background or experience in
the field of pharmaceutical compounds, which was the business IRC
was set to engage in.
Shortly after IRC was organized, IRC entered into a
research/licensing agreement with Newport Pharmaceutical
International, Inc. (Newport). Newport was then engaged in the
manufacture, marketing, research, and development of
pharmaceutical compounds. Newport owned an undivided one-half
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