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begin until sometime in 1990, at the earliest. Mohney had
already been providing services to petitioner for 5 to 6 years.
There is no evidence that the extent or character of Mohney’s
activities with respect to petitioner changed in any way after
the relationship with Deja Vu commenced. Although it appears
that Mohney did do some work for petitioner as an employee of
Deja Vu, the scope of these services was limited to petitioner’s
nightclub. We believe that Mohney’s involvement in general
administration, advertising, legal matters, the bookstore,
theater, arcade machines, and other facilities of petitioner’s
entertainment complex was independent of any work he performed
under the Deja Vu contracts.
Respondent finds support for her disguised dividend theory
in circumstances surrounding the timing of the payment. She
dismisses petitioner’s argument that Mohney deferred collection
of his compensation until 1991 out of concern for petitioner’s
financial situation, pointing out that petitioner had been
profitable in each year since 1986. Respondent proposes that the
real reason for the payment in 1991 was concern about potential
liability for the accumulated earnings tax. In this connection
she attaches significance to the fact that the Internal Revenue
Service audit of several Mohney Group corporations had already
begun, and at some point in 1991 the revenue agent specifically
raised the accumulated earnings tax issue with Shindel, the
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