- 37 -
petitioner's claim of a rebate, because petitioner was the sole
manufacturer of a unique product, particular purchasers might be
prospects for a rebate offer from the manufacturer while others
might not, the retail price was subject to negotiation between
the consumer and the distributor, and the demand for the unique
products offered by petitioner fluctuated geographically and
seasonally.
Petitioner offered detailed testimony setting forth the
factors taken into account in its incentive program and the
objectives it intended to accomplish through its incentive
program, and we conclude that the disputed payments were bona
fide incentive payments made in furtherance of those various
objectives. We conclude that the incentive payments are
excludable from petitioner's gross income as a reduction in the
sale price of coaches.
We are mindful of respondent's position that transactions
between related parties should be subject to close scrutiny
because they may engage in transactions that are not arm's
length. See C.M. Gooch Lumber Sales Co. v. Commissioner, 49 T.C.
at 656; Hall v. Commissioner, 32 T.C. 390, 407 (1959), affd. 294
F.2d 82 (5th Cir. 1961). Respondent has shown that the incentive
payments by petitioner to its dealers for the year ending June
30, 1989, consisted of the entire balance of petitioner's trade
account receivables recorded on petitioner's books. However, we
do not consider this conjunction of numbers to be fatal in the
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011