-56-
Kanter also testified that he recommended Carlco, TMT, and
BWK be removed from IRA’s consolidated group for tax-reporting
purposes because (1) he was concerned that Carlco’s earnings from
tax-exempt municipal bonds might imperil IRA’s interest
deductions, and (2) he wanted to shelter Ballard and Lisle from
“second-guessing” by Freeman or another IRA officer.
Kanter, Transcr. at 3685-3686.32 Pursuant to Kanter’s proposal,
from 1984 through 1989, IRA transferred substantial funds and
other assets to Carlco, TMT, and BWK in the respective
45-percent, 45-percent, 10-percent allocation. From 1984 through
1992, Ballard managed TMT’s investments, and Lisle managed
Carlco’s investments.
3. Additional Findings of Fact Regarding The Holding Co.
Other than identifying The Holding Co. (THC) as a Kanter-
related entity that held investments, the STJ report did not
include any detailed findings of fact regarding the organization
and operation of THC. Inasmuch as THC and its subsidiaries
received some of the disputed payments from The Five, and THC is
32 Kanter did not explain how removing Carlco and TMT from
IRA’s consolidated group of corporations for tax reporting
purposes would serve to shelter Ballard and Lisle from second-
guessing by an officer of IRA, given that IRA purportedly
continued to own all of Carlco’s and TMT’s common stock and
Carlco and TMT remained IRA’s “legally controlled” subsidiaries.
See Petitioners’ Reply Brief at 3.
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