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petitioners were engaged in the adult entertainment business
during the taxable years at issue. A.J. Films, Ellwest Stereo
Theatres of Fort Worth, Ellwest Stereo Theatres of Phoenix,
Ellwest Stereo Theatres of Youngstown, Jolar Cinema, and Premium
Films no longer conduct business.
During the taxable years at issue, all petitioners were
owned, in whole or part, by Harry V. Mohney (Mohney), either
directly or indirectly as one of several beneficiaries of a
trust. Mohney directly owned 100 percent of the stock of
Corporate Investments. Mohney and his children owned beneficial
interests in the Durand Trusts, a group of five domestic trusts,
which owned all the stock of Michigan Reef Development Corp.
The Durand Trusts also owned all the stock of Dynamic Industries
Ltd., a domestic corporation of which M.I.C. Limited was the
wholly owned subsidiary. Mohney together with three family
members and a business associate named Elizabeth Scribner
(Scribner) were the beneficiaries of the Amaranta Trust, a
foreign trust that owned all the stock of several foreign holding
companies. All remaining petitioners were first- or second-tier
wholly owned subsidiaries of two of these foreign holding
companies: Fun Films, Ltd., located in the Turks and Caicos
Islands, and Caribbean Films, N.V., whose residence for Federal
income tax purposes was the Netherlands Antilles. Among the
foreign corporations existing under the Amaranta Trust umbrella
were also two others of significance to these cases:
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Last modified: May 25, 2011