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improved cashflow in that petitioner typically paid for its
purchases within 10 days while the OEM usually had to wait at
least 45 days to be paid on its sale of a finished product. The
three OEMs were regularly asked by other persons to sell surplus
parts to them, but the OEMs always turned these requests down.
The three OEMs would have stopped selling their surplus parts to
petitioner had Beiner become disaffiliated with it.
B. Related Business
In 1997, Beiner and his brother incorporated California
Controls, Inc. (California Controls), whose business is the same
as petitioner’s except that the parts that each sells are made by
a different manufacturer. Beiner and his brother own California
Controls equally, and they share equally in making its business
decisions. During the subject years, Beiner worked for
California Controls approximately 19 hours a week, and it
compensated him for that work.
C. Beiner’s Background and His Management of Petitioner
Beiner was an electrical designer for 27 years before he and
his brother incorporated petitioner. In that capacity, Beiner,
either solely or with others, designed electrical systems for
high-rise office buildings, large hotels, shopping centers, and
numerous residential and commercial projects. Beiner’s salary at
the end of his career as an electrical designer was $90,000 to
$100,000 a year.
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Last modified: May 25, 2011