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Based on the testimony of petitioners' expert, Yakov M.
Balakhovsky, an attorney experienced with Russian and Soviet law,
petitioners claim the following:
Russian businesses, as a matter of custom and
practice, during the taxable years in issue
herein, would deposit funds abroad due to their
inability to open foreign bank accounts, as well
as the absence of a private banking system in the
U.S.S.R. and rampant economic, political and
social turmoil in the U.S.S.R.
[L]ittle formal documentation or other legal niceties
would accompany such deposits * * * because of the
embryonic nature of the Soviet commercial law, the
absence of skilled lawyers, and the inability to
enforce contractual obligations through government
legal channels, due to endemic corruption and the
systemic hostility of the Soviet state towards
entrepreneurial activity.
Respondent did not challenge petitioners' expert's testimony, and
we accept his opinions and find accordingly.
Respondent made a common response to many of petitioners’
proposed findings of fact with respect to the existence of the
customers and American Valmar’s obligations to them: “Objection
to the proposed finding of fact in that it is based upon the
uncorroborated, self-serving testimony of Valeri Markovski.” It
is undoubtedly true that many of petitioners’ proposed findings
of fact are uncorroborated and self-serving. That, however, does
not necessarily mean that they are false. Respondent also
adverts to the paucity of American Valmar’s records and certain
seeming inconsistencies in those records as grounds for rejecting
all of American Valmar’s allegations. We have examined the
records and are unconvinced that either their minimal extent or
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