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formal annual meetings or minutes.
Are there any other planned uses of these funds?
On or about December 12, 1990, two MW&E attorneys advised
the revenue agent that they would be representing NITCO during
the examination. By letter dated December 17, 1990, one of the
MW&E attorneys further advised the revenue agent, among other
things: (1) NITCO had not yet completed its review of the
planned uses for its accumulated earnings, and (2) NITCO was not
willing to consent to an extension of the period of limitations
on assessment and collection of its tax liability with respect to
1987. The MW&E attorney's December 17, 1990, letter, in
pertinent part, stated:
You have also asked the company to identify the
potential uses of net liquid assets [and accumulated
earnings]. We have recently been retained by the
company for purposes of this representation and are in
the process of reviewing the corporate documentation
and interviewing the officers. When that process has
been completed, we will provide you with a full
statement concerning the historic purposes for
accumulating net liquid assets [and earnings].
Although the process is far from complete, the list
included in your [October 31, 1990] document request
overlooks the largest and most obvious need for net
liquid assets. That is, the preservation of financial
strength to cope with the uncertainty present in the
telecommunications industry during the period under
audit. Those uncertainties concern technical
developments and regulatory governance and management
succession.
As counsel to the company, we have advised them
not to extend the statute of limitation for the year
1987 for purposes of audit. While we generally
recommend extensions of the statute for purposes of
appellate review of a case, we do not recommend
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