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amount of the investment. LTD also charged an annual management
fee, starting with the second year, of 1.00 percent of the value
of the assets under management. Petitioners did not present
evidence on and the record does not reveal the precise amounts of
clients’ funds at each level of the graduated placement costs.
Consequently, we are unable to calculate LTD’s Inversat Fund
commission on a sliding scale. We note that Deloitte used in its
audit a figure of 3.00 percent, and we apply that amount in the
instant case. Accordingly, the arm’s length charge for INC’s
services for such operation is the amount of clients’ newly
placed net assets times 3.00 percent plus the amount of clients’
already placed net assets times 1.00 percent.
LTD paid INC to maintain investments placed in the Matric
Fund. LTD charged its client, Matric Corp., a consulting fee of
$47,500 to maintain the Matric Fund. Accordingly, the arm’s
length charge for INC’s services for that operation is $47,500.
LTD paid INC to maintain investments placed in TVA. LTD
charged its client, TVA, Inc., an administration fee of $5,000
per month. Accordingly, the arm’s length charge for INC’s
services for that operation is $5,000 per month.
LTD paid INC to effect currency transactions. The amount
that LTD earned is the amount that LTD charged its clients. Some
of LTD’s income, however, was generated by LTD’s Guadalajara
office and not by INC. Consequently, INC will not be allocated
that income. Accordingly, the arm’s length charge for INC’s
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