- 40 -
commissions: “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.”
Lastly, we note that in no year did the partnership
interests in DPP mirror shareholdings in FIL. In addition,
interests in DPP fluctuated repeatedly while FIL stockholdings
remained constant. Such dichotomy undercuts petitioners’
argument that DPP was created as a vehicle to distribute earnings
and profits to FIL shareholders.
Faced with the foregoing, we will not permit petitioners now
to advance a position amounting to a disavowal of tax return
treatment, unsupported by any consistent respect in reporting and
actions, and subsequent to receipt of a tax benefit in a foreign
jurisdiction based upon contrary assertions. We hold that the
payments from FIL to DPP must be characterized as compensation
for services.
2. Earner of the Income
We next consider the question of which party or parties is
to be treated as earning, and hence must report, this
compensation. Because we have already eliminated DPP, our focus
turns to the relative merits of deeming either DPC or the
individual petitioners the earners of the income. Respondent has
determined that the payments must be allocated to DPC.
Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: May 25, 2011