- 86 - 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 shareholdersPage: Previous 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 Next
Last modified: May 25, 2011