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Clients establishing an offshore corporation or trust were
charged fees for the service directly against their accounts.
LTD’s gross receipts derived from charging an "opening expense"
and an "annual expense". LTD’s direct costs were its payments to
the third party lawyers and fiduciaries. The gross receipts and
direct costs relating to LTD’s "Client Incorporation Fees" for
each taxable year are as follows:
TYE June 30 Gross Receipts Direct Costs
1986 $147,951 $18,286
1987 363,014 126,855
1988 290,518 161,037
1989 404,286 227,697
g. Legal Advice Income
In an operating manual under the heading, "Legal Advise"
(sic) LTD described its services regarding the creation of
offshore corporations and trusts. The record reveals only that
LTD derived gross receipts relating to "Legal Advice Income".
LTD’s direct costs were the commissions that it paid to promoters
for counseling clients regarding offshore corporations or trusts.
The gross receipts and direct costs relating to LTD’s "Legal
Advice Income" for each taxable year are as follows:
TYE June 30 Gross Receipts Direct Costs
1988 $8,630 $3,453
1989 (328) 5,272
h. Letters of Credit
LTD issued, either directly or through a bank, letters of
credit to Mexican banks to secure loans for its clients. The
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