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Berger also calculated the amount of dividends to be paid
out by the Sley Corporations at the end of the year so as to
avoid the personal holding company tax. The amount of the
dividends was dictated by the amount of the taxable income of the
Sley Corporations--if taxable income decreased, then dividends
decreased; if taxable income increased, then dividends increased.
Before 1987, there were no Forms 1099 issued to shareholders
for dividends income in the form of payment of travel expenses.
At some point in the period 1980-1986, Berger discussed the
travel expenses paid by the Sley Corporations, with someone
associated with the Sley Corporations. Berger was told that the
travel and entertainment expenses were incurred so that the
officers of the Sley Corporations could meet to discuss corporate
business, and that there were no personal expenses included in
those amounts. Berger had never seen the travel records of the
Sley Corporations before the trial, nor had he heard of specific
trips taken by petitioner, Betsy, and the children. If Berger
would have heard of trips to the resort destinations, described
under Travel and Entertainment Expenses, supra, then he would
have asked whether the trips were taken for personal or business
purposes. If a trip was taken for personal purposes, then Berger
would not have deducted the trip expenses on the Sley
Corporations’ tax return, and he probably would have treated the
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