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that period it continued to operate as a retail travel agent.
Air America returned to doing consolidator business at the end of
1988. Hereinafter, we will refer to Air America and the NA Tours
companies collectively as petitioner’s or his corporations.
By 1987, petitioner’s corporations were generating
approximately $50 million in annual gross receipts from their
operations as consolidators for Northwest and had between 70 and
80 employees. During 1987, petitioner hired David Chung (Chung)
to serve as accountant for his corporations. Sometime later,
petitioner promoted Chung to controller and vice president of IL
NA Tours. Among other things, Chung was responsible for
preparing financial statements for the NA Tours companies.
Petitioner continued to be the sole shareholder and
president of Air America and each of the NA Tours companies
throughout 1988. When he incorporated each NA Tours company,
petitioner did not contribute any money or property to the
capital of the corporation. None of the NA Tours companies ever
declared a dividend. IL NA Tours used the other NA Tours
companies, Air America, and unaffiliated subagents as its
subagents to distribute airline tickets.
The NA Tours companies continued to operate as consolidators
for Northwest into 1988. In 1988 IL NA Tours also operated as a
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