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between him and petitioner or the shareholders. Their
understanding was based on what they had been told, by Mohney
himself and perhaps others, and it was confirmed by his
availability 24 hours a day to participate in decisions on any
corporate matter of importance that arose. Neither had ever seen
documentation of a consulting relationship, and none existed.
There is no written consulting agreement between petitioner and
Mohney relating to any period between 1985 and 1992. Petitioner
has no timesheets, statements or bills detailing the dates,
hours, or specific times for which compensation was payable to
Mohney. Petitioner did not accrue a liability for consulting
fees on its books at the time Mohney rendered services.
Beginning in or around 1991, petitioner engaged the services
of Deja Vu, Inc. (Deja Vu). This company provides management
consulting for nightclubs. At all relevant times its president
was Krontz and Mohney was one of its salaried employees. Mohney
performed some services for petitioner in this capacity. While
it is clear that petitioner paid Deja Vu for its consulting work,
it is not clear how much of the work was performed by Mohney or
how much Deja Vu was paid for Mohney’s work. Mohney reported
wages from Deja Vu of $252,000 in 1990 and $261,000 in 1991.
It was Mohney’s original understanding from discussions with
Newlands that eventually he would receive 10 percent of
petitioner’s gross receipts. Petitioner made no payments to him
during 1985 through 1987. In 1988 Mohney caused petitioner to
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