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One further example illustrating the business environment
within the Deitsch entities is found in Joseph Deitsch’s reply
when asked whether DPC had an official research and development
department: “Official? No. Everybody wears many hats. So,
anybody has an idea, they try to expand. The company is on a
first-name basis, no titles.”
Hence, on the basis of this record, we conclude that any
formal consulting relationship established by the 1980 agreement
had ceased prior to issuance of the July 1990 termination letter.
For the reasons summarized below, we are satisfied that form was
by such letter brought into harmony with substance. First, the
majority of the specific services called for in the agreement had
been rendered obsolete by FIL’s shift away from U.S. markets.
Second, to attribute to DPC whatever assistance continued to pass
to FIL, by deeming DPC the true earner of the income, would
require a finding that the individual petitioners were acting on
behalf of DPC when furnishing advice. Such a conclusion,
however, is contrary to evidence that petitioners worked
primarily for the collective good of the Deitsch family and
without regard to corporate roles. We are convinced that status
as DPC employees did not motivate their actions in this area. In
addition, since nearly all payments after 1990 were made to DPP,
not DPC, and because FIL was owned by petitioners in their
individual capacities, with DPC having no direct stake therein,
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