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then Moore would decide the amount of the rebate to each dealer.
Petitioner also paid incentives to independent dealers that
sold Foretravel coaches, but those incentives were not
necessarily identical to the incentives paid to petitioner's
subsidiaries. The incentives petitioner paid to the various
subsidiaries were not necessarily identical either, in part
because sales fluctuated both seasonally and geographically.
Petitioner offered the incentives needed to spur sales at the
particular time.
The dealer incentives for the years in issue were as
follows:
Rebate for year ended June 30
Dealer 1989 1990
Arizona $22,005.18 --
California 231,145.18 $404,321.45
Dallas 10,488.94 953,748.93
Florida 191,089.37 696,004.99
Tennessee 336,683.04 456,060.61
Nacogdoches 369,261.87 --
Total: $1,160,673.58 $2,510,135.98
For 1989, Weaver recorded the incentive payments as a credit
to trade accounts receivable and a debit to bad debts on
petitioner's books. Weaver recorded the incentive payments as a
debit to the bad debts account because he was stretched for time
and took a shortcut. He knew that the auditors from Axley & Rode
would reclassify or make an adjustment to the entries where
appropriate. In 1989, Moore directed Weaver to record the
incentive payments as a credit to trade accounts receivable from
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