- 10 - 2. Kadac, Inc. Mr. Cummings formed Kadac to replace Dacor. He incorporated Kadac in Nevada on April 28, 1989. Mr. Cummings, Mrs. Cummings, and their sons, Deen, Grant, and Bruce, each owned 200 shares of Kadac stock. Kadac and Lasercolor share facilities in Bellevue, Washington. Kadac did not pay dividends during the years in issue. Kadac provided management services to petitioner and Lasercolor. Neither Dacor nor Kadac kept time sheets or other records of the services they or any member of the Cummings family performed for petitioner. Kadac's taxable year ended on December 31 during the years in issue. Kadac’s only employee from 1989 to 1991 who was not related to the Cummings was Wendy Jo Goddard. 3. Management Fees Dacor received management fees of $276,266 in its fiscal year 1989 (ending March 31, 1989) and Kadac received $317,906, $806,658, and $881,820 in calendar years 1989, 1990, and 1991, respectively (a total of $2,282,650 from April 1, 1988 to December 31, 1991).1 Dacor paid officer compensation, salary, 1 Petitioner deducted management fees totaling $1,721,890 for fiscal years (1989, 1990, and 1991); i.e., from Apr. 1, 1988, to Mar. 31, 1991. The record does not indicate whether petitioner paid the $881,820 ratably throughout 1991. If petitioner paid the $881,820 ratably throughout 1991, then Kadac would have received one-fourth of that amount ($220,455) by Mar. 31, 1991, and Dacor and Kadac would have received $1,621,285 from Apr. 1, 1988 to Mar. 31, 1991.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011