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to incorporate and receive wages from Plus in Canada because of the
prohibition against a Canadian citizen's working in the United
States without a visa.
During the years 1983 through 1990, Mr. Podd owned 28 percent
of the outstanding stock of Plus, and Mrs. Podd, Stephen, and
Victor, Jr. each owned 24 percent. Mr. Podd was its president, Mrs.
Podd was its secretary, and Stephen and Victor, Jr. were vice
presidents. The Podds and Mrs. Podd were also the only employees of
Plus during this time period.
A "Management Agreement" dated June 1, 1983, and executed by
Victor, Jr. as vice president of Powertex, and Mr. Podd as president
of Plus provided that Plus would "operate" Powertex for the period
from June 1, 1983, to May 30, 1984, in return for "compensation" of
$120,000. The agreement provided that it could be terminated by
mutual agreement and otherwise would be automatically renewed for
successive 3 year terms. Mr. Podd and Victor, Jr. prepared three
amendments to the management agreement increasing the "compensation"
payable to Plus to $125,000 for fiscal year 1985, $175,000 for
fiscal year 1987, and $250,000 for fiscal years 1988 through 1990.
Although the amendments stated that they were executed on May 10,
1984, May 22, 1986, and May 11, 1987, they were not actually
executed until late 1990 or early 1991.
Powertex made payments to Plus as follows:
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