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OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 83
I. Management and Consulting Fees ............ 83
A. Eurotor ..................... 86
1. Services ................... 86
2. Compensation in Proportion to Stockholdings . 87
B. Royal Catering .................. 92
C. A. Gelabert, Santandreu, and Segui ........ 93
II. Franchise Transactions and Royalty Fees ....... 95
III. Interest Expense and Guarantee Fees Resulting
From Lump-Sum Franchise Payments . . . . . . . . . . 111
IV. Interest Deductions on the
Section 351 Transactions . . . . . . . . . . . . . . 121
V. The $236,313 That MDT Paid to
MSI as a Marketing Fee . . . . . . . . . . . . . . . 128
VI. New Jersey and California Expansion Expenses ..... 129
VII. Additions to Tax and Penalties for
Fraud and Negligence ................ 131
A. Fraud . . . . . . . . . . . . . . . . . . . . . . 131
B. Negligence .................... 137
VIII. Substantial Understatement and Increased Interest . . 142
A. Substantial Understatement ............ 142
B. Increased Interest ................ 143
IX. Withholding of Tax at the Source ........... 144
A. Interest That MDT and MSI
Paid to MABV and MTBV, Respectively . . . . . . 146
B. Franchise Fees That Were Paid by MANV to Manver in
Fiscal Year Ended November 30, 1987 . . . . . . 147
C. MDT and MSI Payments to Manver in March 1988 ... 148
D. Amounts That MANV, MSI, and MDT Paid to Eurotor as
Management and Consulting Fees ......... 149
E. Guarantee Fees Paid to Dapy and
Roundabout in Connection With the
Commercial Paper Transactions . . . . . . . . . 150
X. Failure To Deposit Withholding Tax .......... 151
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Last modified: May 25, 2011