- 15 -
creation was from sources within the United States. Petitioners
argue that the income was from sources outside the United States
because the promoters provided the counseling, the third party
lawyers and fiduciaries performed the incorporation and trust
creation services, and INC only passed information among the
parties.
For its services of client incorporation and trust creation,
LTD charged its clients:4 (1) an "opening expense", which
consisted of LTD's fee and fees for third party lawyers and
fiduciaries, and (2) an "annual expense". Petitioners did not
offer any evidence establishing the amounts received and paid by
LTD as fees for third party lawyers and fiduciaries. Moreover,
petitioners did not offer a methodology for apportioning or
attributing LTD's income between LTD's fee and the fees for third
party lawyers and fiduciaries. Furthermore, the record does not
provide sufficient information to establish on our own the amount
of income that should be apportioned to each source.5
Petitioners bear the burden of proving that the income derived
4 As we noted in our prior opinion, the record reveals
instances in which LTD dealt with "related" or favored clients
who were charged lower or no fees.
5 The record contains LTD's charges for opening expenses and
annual expenses but does not contain a breakdown of the "opening
expense" between LTD's fee and the fees for third party lawyers
and fiduciaries. As to LTD's expenses, the record either does
not contain a breakdown of incorporation expenses between fees
for third party lawyers and fiduciaries and document fees or does
not establish the nature of the "incorporation expenses".
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011