Jacob and Chana Pinson, et al. - Page 20




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               (c) Irrespective of whether you understand the entity                  
                    receiving the funds to be Deitsch Plastic Company                 
                    or Deitsch Plastic Partners, please explain your                  
                    understanding of the work performed to earn the                   
                    funds received from FIL.                                          
                         *    *    *    *    *    *    *                              
               (e) Explain your understanding of the work performed                   
                    by the shareholders to earn the special                           
                    commissions.  Please provide any documentation                    
                    supporting this understanding.                                    
               The October 14, 1999, response from Israel’s Ministry of               
          Finance reads:                                                              
               These are the answers from the Assessing Office:                       
               (a) Flocktex did not pay dividends to shareholders in                  
                    the years 1992-1993, but instead paid a special                   
                    commission.                                                       
                    Files or reports for the 1991-tax year are                        
                    unobtainable at such short notice.  We requested                  
                    this information and would be able to complete our                
                    answer upon its arrival.                                          
               (b) The Assessing Officer does not distinguish between                 
                    the two separate companies.                                       
               (c) The taxpayers contended that the payments were for                 
                    services rendered in form of management and                       
                    consulting services.  The Israeli company reported                
                    the payments as such.  There was no question that                 
                    management services have actually been given.                     
                    Examination of the work performed to earn this                    
                    income was not pursued any further.                               
               (e) As in (c) above.                                                   











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