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the years at issue. Mr. Stewart has not shown that he performed
those services as an employee or independent contractor of the
corporation. Mr. Stewart was not paid by the corporation as an
employee, independent contractor, or executive in 1995 and 1996,
and it does not appear that the corporation ever compensated him
for the general management services he performed in 1995 and
1996. There was no employment agreement between Mr. Stewart and
the corporation, and there are otherwise no records which show
Mr. Stewart provided the services in any capacity as an employee
of the corporation. Also, there is no documentation showing the
number of hours that Mr. Stewart spent providing the management
services to the sole proprietorship. There is no reasonable
basis to distinguish the services that Mr. Stewart provided
generally to his sole proprietorship and those that he might have
performed through the corporation. And, there is no reasonable
basis for us to find that the corporation or any of its employees
actually rendered services to the sole proprietorship in 1995 and
1996.
Petitioners point to the management fee agreement between
Mr. Stewart and the corporation. The agreement does not specify
or otherwise describe the management services to be performed by
the corporation, and the “annual retainer” does not relate to any
services actually to be rendered by the corporation. The
agreement was not the product of arm’s-length negotiations. The
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