-49-
On October 28, 1975, Keating’s 1,000 shares of IRA common
stock were exchanged for 500 shares of class B preferred stock.
Exh. 9051. Although she did not recall the fact, Schott held
1,200 shares of IRA class A preferred stock until 1982. Schott,
Transcr. at 2113, 2129; Exhs. 10, 12, 14, 17. Schott held IRA
stock to enable the company to hold a corporate real estate
license. Schott, Transcr. at 2119; Exh. 4022.
On October 28, 1978, IRA issued 1,000 shares of common stock
in equal shares to 25 trusts known collectively as the Bea Ritch
Trusts. Exh. 9051; Exh. 135, at 23. By 1978, IRA redeemed
Keating’s 500 shares of class B preferred stock. Exh. 4.
During the examination of IRA’s returns, an IRS agent
recalled being presented with IRA corporate minutes for 1983
which indicated that IRA’s shareholders at the time included the
Bea Ritch Trusts, Schott, a Ballard family trust, and a Lisle
family trust. Batory, Transcr. at 3151-3152.
b. The Bea Ritch Trusts
The Bea Ritch Trusts were established in 1969 and were named
after Beatrice K. Ritch, Kanter’s mother. After 1982, IRA had
only common stock outstanding, and the Bea Ritch Trusts were
IRA’s sole shareholders.
Originally, when the 25 Bea Ritch Trusts were established in
1969, the beneficiaries of the Bea Ritch Trusts were Kanter,
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