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directors and their assistance with the New Jersey and California
expansions.
Respondent’s primary arguments to support her determination
that the fees paid as management and consulting fees were
disguised dividends are: (1) Petitioners failed to establish
that services were provided as required by section 162(a);
(2) payments were made in proportion to stockholdings; and (3) it
is unclear in what capacity RC, A. Gelabert, Santandreu, and
Segui were performing various tasks.
A. Eurotor
1. Services
The preponderance of evidence is that substantial services
were provided to petitioners by various persons who also were
directly or indirectly owners of petitioners. The Eurotor
shareholders were successful businessmen who possessed a myriad
of skills from management to financing. The Eurotor
shareholders’ ability to select key management employees,
suitable locations, and apply their knowledge of the tourist and
restaurant industries were services that were valuable. The
shareholders' experience with an existing enterprise in Spain on
which this venture was modeled added to the value of the
services. Santandreu and Segui spent considerable time in the
United States, assisting with operations and providing management
services. Unlike dividends, the payment of management fees was
not dependent on earnings and profits. The Eurotor shareholders
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