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certified public accountant who had been retained to review tax
compliance within the group.
It was almost certainly not the revenue agent’s inquiries
that precipitated Mohney’s decision to collect payment from
petitioners and the other Mohney Group companies he managed.
Shindel testified that the decision had already been made by
November 1990. This does not mean that concern about potential
liability for the accumulated earnings tax was not a principal
reason for Mohney’s decision, however. Shindel also testified
that he had become aware of the accumulated earnings tax problem
in regard to a number of Mohney Group companies before the IRS
audit began, and that he discussed the problem with Mohney. The
sheer number of companies making payments and the size of the
amounts paid to Mohney in 1991 relative to prior years supports
the inference that the 1991 payments marked a departure from
Mohney’s usual policy of collecting payment only as, and to the
extent that, the financial situation of each company permitted.
Yet even if concern over accumulated earnings tax liability was
indeed the principal motivation for Mohney’s decision, this fact
would be no less consistent with characterization of the payment
as compensation for prior services than with characterization of
the payment as a disguised dividend. In the absence of
documentation establishing an amount of compensation owed to
Mohney for his services, Mohney would have had reason to be
concerned about petitioner’s ability to justify accumulations to
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