Medieval Attractions N.V - Page 131

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          Lebasi, N.V. (Lebasi).  Linda Parks (Parks) of C&L Orlando                  
          prepared and signed the MSI 1988 return.  It was also signed by             
          Sans.  At the time she prepared the return, Parks was aware of              
          the Form 5472 requirement but did not know that the franchise fee           
          was being paid to a related party.                                          
               B.  MANV/MDT                                                           
               The MANV/MDT Federal tax returns for fiscal years ended                
          November 30, 1987 through 1990, were prepared by the Los Angeles            
          C&L office.  Statements attached to the returns indicated that              
          MANV transferred its assets to MABV and that MABV transferred its           
          assets to MDT, in section 351 transactions for stock and                    
          securities.  The statements included information that MABV had              
          assumed all of the liabilities of MANV.                                     
               MANV/MDT reported the following on its Federal tax returns:            
                                                                 Royalties/           
          FYE       Gross          Total          Taxable   Franchise                 
          Nov. 30   Receipts        Income        Income         Payments             
          1987     $14,409,710    $10,601,670    $4,347,581     $1,441,924            
          1988      18,665,675     13,836,206     1,183,497      3,719,321            
          1989      21,278,643     15,537,012     1,054 389      5,148,541            
          1990      31,251,794     22,688,216     5,563,637      2,975,726            
          12/31 Calendar Year:                                                        
          1990      2,367,034      1,730,776      442,963        248,004              
          1991      34,793,808     24,047,269     2,817,007      4,396,287            
          Additionally, petitioners MANV/MDT claimed deductions for                   
          payments it made as management and consulting fees in the amounts           
          of:                                                                         







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