KENCO Restaurants, Inc. et al. - Page 19

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          GMK's share of the total BKK management cost fee allocation                 
          increased by a factor of seven.  During that period, facts                  
          stipulated by the parties show that GMK's gross receipts                    
          increased substantially as well.  During that period, there were            
          no unusual events or other requirements of GMK that justified a             
          substantial increase in management services required in 1991 and            
          1992 as compared to 1990.                                                   
               Additionally, Perrysburg, which allegedly required minimal             
          management services, was charged $29,000 in 1990, $60,415 in                
          1991, and $42,700 in 1992.  Petitioners did not provide any                 
          explanation, in terms of services required by Perrysburg from               
          year to year, that would account for those differences.                     
               Finally, it defies explanation how Wapak was not allocated             
          any of BKK's management costs in 1990.  Petitioners allege that             
          BKK's management costs were allocated using an allocation                   
          methodology predicated on the number of hours that the owners               
          spent at or on behalf of each of the commonly controlled                    
          corporations.  Wapak was incorporated and operating a Taco Bell             
          restaurant in 1990.  We suspect that Wapak's insufficient cash-             
          flow was the determinant factor in BKK's management's decision              
          not to allocate Wapak a management cost fee in 1990.                        
               Petitioners claim that contemporaneous records of time                 
          allocations “were actually created, maintained and used in making           
          the Petitioners’ allocations.”  Those records, petitioners claim,           
          were inadvertently destroyed.  The only evidence of                         




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