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compensation was paid by Norcom to Quest before April 1992.
However, minimal expenses Quest incurred in 1991 were reimbursed
by Norcom.
b. April 1992 Through 1996
The relationship between Quest and Norcom changed
significantly in April 1992 when Mr. Lombardi resigned from
Norcom. Immediately after Mr. Lombardi’s resignation, Mr. McColl
assumed oversight of the day-to-day operations of Norcom,
especially with respect to oversight of Norcom’s finances.6 Mr.
McColl moved his office to Norcom and worked at Norcom on a full-
time basis. In addition to oversight of Norcom’s operations, Mr.
McColl became a Norcom officer.7 From June 1992 until December
1993, he served as Norcom’s secretary and treasurer. From August
1992 until December 1993, he also served as the executive vice
president of Norcom. The record does not indicate that Mr.
McColl was ever compensated by Norcom.
6 Mr. Arnold at least nominally assumed some of Mr.
Lombardi’s responsibilities by temporarily taking the positions
of president and CEO of Norcom. Despite holding these offices,
the evidence does not indicate that Mr. Arnold was actively
involved in the management of Norcom.
7 Petitioner claimed that Mr. McColl was not an employee of
Norcom. Because respondent has not disputed this claim, we have
accepted it as a stipulated fact. Accordingly, we have not
considered whether Mr. McColl was an employee of Norcom for
Federal tax purposes and that any work he performed for Norcom
was under such employment and not on behalf of Quest. Sec.
3121(d)(1) (defining an employee of a corporation to include its
officers).
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