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the October 20, 1986, minutes of LIIBV's board of directors, and
the entire record show that LIIBV followed DeGroote's and his
core management team's instructions.
Petitioners point out that the LIIBV board revised some of
the documents that Haworth and Cairns had authored. For example,
Haworth changed the grid system promissory note required by his
October 16, 1986, letter to LIIBV. Despite this, the foreign
directors were clearly subordinate to DeGroote and his management
team.
We conclude that petitioners, LIIBV, and LTL acted in
concert with DeGroote and his core management team and not at
arm's length. The form and the labels used for the transaction
may signify little when the parties to the transaction are
related. Calumet Indus. Inc. v. Commissioner, 95 T.C. 257, 286
(1990); Malone & Hyde, Inc. v. Commissioner, 49 T.C. 575, 578
(1968).
The fact that the dealings between LTI, LII, and their
subsidiaries, and LIIBV were not at arm's length requires that we
give less weight to the Mixon factors relating to the form of the
transaction than to substance. See Gregory v. Helvering, 293
U.S. 465 (1935); Texas Farm Bureau v. United States, 725 F.2d at
312; Estate of Mixon v. United States, supra at 407; Tyler v.
Tomlinson, supra at 850; Road Materials, Inc. v. Commissioner,
supra at 1124.
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