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Specifically, respondent maintains that DPC in substance
continued to render services to FIL under the 1980 assistance
agreement, and that the letter of July 1990 formally terminating
the agreement should be disregarded. Respondent also relies
heavily on the presence and activities of B. Mayer Zeiler in
Israel to show that DPC continued to perform the services called
for in the 1980 agreement.
We believe, however, that the record in this case
establishes the lack of a formal consulting relationship between
DPC and FIL. To the extent that the individual petitioners
advised FIL, the evidence suggests that they did so informally,
on behalf of the Deitsch family, rather than specifically in
their capacities as employees of DPC. We base this conclusion on
documentary evidence regarding the sales pattern of FIL and the
services detailed in the 1980 agreement, as well as on the
testimony of petitioners concerning the mode of business
operation of the Deitsch family and entities.
Stipulated sales figures for years 1978 through 1994 reveal
that of FIL’s total sales of $61,679,752 during the 1991 to 1994
period at issue, only $39,856 was derived from sales in the
United States and Canada. Moreover, this trend wherein North
American sales accounted for a very small percentage of FIL’s
sales volume was established in the mid-1980’s. Yet under the
1980 agreement, two of the five enumerated services to be
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