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corporation formed and owned by Robert, prepared the Random
Reports.6 Robert designed the output portion of the Random
Processing System that analyzed SSI’s client’s financial
information and produced the Random Reports. The fee for the
first Random Report was $155; each quarterly Random Report
thereafter cost $20.
Robert directed SSI’s board of directors meetings and some
of the shareholder meetings. Robert (1) worked directly with
third parties who presented tax shelter proposals to SSI and (2)
performed due diligence work in connection with the tax shelter
offerings. Robert worked with attorneys to determine how SSI’s
tax shelter programs would be put together and offered. Robert
had veto power over which tax shelters would be offered to SSI’s
clients.
Periodically, Robert asked Monica, SSI’s treasurer, about
SSI’s financial performance. By letter dated March 8, 1982,
Monica informed Robert and Doyle that SSI’s 1981 gross receipts
and net receipts on a cash basis were $2,384,052 and $893,312,
6 So stipulated. In Cunningham v. Commissioner, T.C.
Memo. 1989-260, which involved tax liabilities of clients of some
of Robert’s and Monica’s entities, we found, based on the record
made by the parties in that case, that Random Processing
Services, Inc., was a corporation formed by Monica. Also see the
extensive discussion of SSI’s operations in Rybak v.
Commissioner, 91 T.C. 524 (1988).
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