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The option was thereafter exercised and the redemption of CIBV
shares from Nestor completed on December 20, 1990. Mr. Vajna
then owned 49.9 percent of CIBV and the Mong Family Trust owned
50.1 percent.
Given this scenario, it has been respondent’s position from
the outset that, for purposes of subpart F, ownership of the Mong
Family Trust and the Kassar Family Trust should be attributed to
petitioners and to Mr. Kassar, respectively. Respondent’s
amended answer now seeks to attribute ownership of Nestor to
petitioners as well. Respondent asserts that ownership of Nestor
bears upon the status of CIBV as a CFC on and after December 30,
1989, and upon the proper allocation of CIBV’s subpart F income.
At the hearing held on November 15, 2000, counsel for petitioners
strenuously objected that respondent was engaging in a “fishing
expedition”. During such proceeding, the principal evidence
offered by respondent that purported to establish a link between
Mr. Vajna and Nestor was two documents entitled “IRREVOCABLE
PROXY AND POWER OF ATTORNEY”. On December 30, 1989, the same
date as the buyout was effected, Nestor executed these grants in
favor of Mr. Vajna and the Mong Family Trust, respectively. In
operative part, the documents read:
The undersigned hereby irrevocably appoints and
constitutes Mr. Andrew G. Vajna [or Bankers Trust
International Services, Ltd., as trustee of the Mong
Family Trust] as its proxy and attorney-in-fact to
exercise, do, and perform any act, right, power, duty,
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