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Mr. Fleming’s firm, worked with Mr. Fleming in his representation
of Ms. Moore and Dr. McKernan. He wrote the initial draft of the
assignment and assumption agreement. He testified that he and
Mr. Fleming assumed that the January 1, 1997, effective date
reflected “the way they [Drs. Joffe and McKernan and Ms. Moore]
had been treating it”; i.e., their respective membership
interests. The testimony of Dr. Joffe, Mr. Fleming, and Mr.
Schwartz constitutes evidence that there was an understanding
among the members of the LLC (and certainly on Dr. Joffe’s part)
that the purpose and effect of the assignment and assumption
agreement was to formalize their prior oral agreement to have Dr.
Joffe transfer 10-percent membership interests to Dr. McKernan
and Ms. Moore, effective January 1, 1997.
Dr. Joffe’s 1997-2000 Federal income tax returns would
reflect whether he respected the LLC Schedule K-1 attributions to
him, for those years, of an 88-percent membership interest in the
LLC. Respondent argues that petitioners could have subpoenaed
Dr. Joffe and required him to produce his tax returns. Indeed,
Dr. Joffe did testify, as respondent’s witness, and was subject
to cross-examination by petitioners’ counsel. Petitioners asked
him no questions about his 1997-2000 returns. Petitioners’
failure to question Dr. Joffe with respect to his returns or
require him to produce those returns raises an inference that
they would reflect Dr. Joffe’s belief that he, in fact, possessed
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Last modified: November 10, 2007