- 28 -
Third, agreeing in the stipulation of facts to disregard the
royalty agreement and ECI for Federal income tax purposes, the
parties have left the Court with an incomplete picture of the
business and financial relationships of petitioner and Crocus
during the taxable periods at issue. The problem has been
aggravated by respondent’s unexplained failure to follow through
with discovery after the Court granted respondent’s application
for a letter of request authorizing a foreign deposition.
Against the background of the declaration in support of
petitioner’s motion for summary judgment “that dealing with
quasi-government agencies in Russia is a sensitive mixture of
politics, negotiation, and money,” we follow the direction of
paragraph 27 of the stipulation of facts to disregard any
suspicions raised by the use of a tax haven jurisdiction as the
locus for the royalty agreement to which petitioner became a
party,15 by the criminal investigation16 and the invocation by
petitioner’s stockholders of their Fifth Amendment privilege,17
15The Republic of Ireland was regarded by respondent as a
tax-haven jurisdiction during the taxable periods at issue. See
1 Audit, Internal Revenue Manual (CCH), sec. 4233, Exhibit 500-8,
at 9509.
16Cf. Capital Video Corp. v. Commissioner, 311 F.3d 458 (1st
Cir. 2002), affg. T.C. Memo. 2002-40.
17Because of the invocation of the Fifth Amendment privilege
by petitioner’s stockholders, petitioner has not provided
relevant information with respect to the business and financial
relationships between petitioner, ECI, and Crocus. An invocation
of the Fifth Amendment is not a substitute for relevant evidence,
(continued...)
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011