- 9 - SRI expenses 164,352 128,268 In the Explanation of Adjustment attached to the notice of deficiency, respondent explained that petitioner had not established that the amounts claimed were paid or incurred during those taxable years or that the expenses were ordinary and necessary to petitioner's management and consulting business. In their respective Tax Court cases, petitioner and Ohanesian adopted positions substantially at odds with each other, as well as with the position each had taken in the State court case. Ohanesian maintained that his payments to petitioner were for legitimate management expenses. Ohanesian further contended that the consulting agreements were valid and enforceable as written. Petitioner, on the other hand, posited that it was an agent of Ohanesian and that the payments for the automobiles and other expenses of the Ohanesian family and related entities were on account of that relationship. In this regard, petitioner theorized that, since it had recognized income on moneys received from its principal (Ohanesian) that were used to pay expenses as directed by Ohanesian, it was entitled to deduct those payments. (Remaining adjustments were unrelated to the Ohanesian-related items. It was generally understood by petitioner and respondent that these items would be resolved after the Ohanesian-related items were resolved, since the former were so small as to be de minimis in comparison with the latter.) In so arguing, petitioner relied on the existence and validity ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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