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Taxable Year Ending Deficiency
June 30, 1988 $576,964
June 30, 1989 632,046
June 30, 1990 511,793
June 30, 1991 81,389
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After settlement, the issue for decision is whether certain
funds transferred to entities related to petitioner constitute
ordinary and necessary business expenses under section 162(a).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
When the petition was filed, petitioner’s principal place of
business was located in Houston, Texas.
During the years in issue, petitioner operated as the
exclusive U.S. corporate distributor for Gamesa, S.A. de C.V.
(Gamesa), a Mexican manufacturer of food products, such as
cookies, crackers, bakery goods, and pasta.
In 1984, a Mexican businessman named Alberto Santos de Hoyos
(Santos de Hoyos) formed petitioner as a Texas corporation and as
a wholly owned subsidiary of Cremin Corp., B.V. (Cremin), a newly
formed Netherlands corporation. Cremin in turn was a wholly
owned subsidiary of Rubbik Corp., N.V. (Rubbik), a newly formed
Netherlands Antilles corporation.
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Last modified: May 25, 2011