Affiliated Foods, Inc. - Page 16

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          concedes that the payments should have been included in income              
          during 1989 and 1990, respectively.                                         
               Petitioner deposited the $60,000 and $100,000 into its                 
          Amarillo account in 1989 and 1990, respectively, withdrew cash in           
          the amounts deposited, and gave the cash to Mr. Val Clawson.                
          Mr. Clawson is an employee of Dejarnett Sales, which is a food              
          broker for Western.  Mr. Clawson was told to distribute this cash           
          to the member stores at the food shows.                                     
               Western does not provide any currency to be passed out at              
          the food show on its behalf.  However, using the money given to             
          him by petitioner, Mr. Clawson offered allowances on Western                
          products purchased at the show.  For example, if a Western                  
          product had a show allowance of a dollar a case and the member              
          store bought 100 cases, then he would give the store $100 cash.             
          He also offered payments by check; the decision on whether to               
          accept currency or a check was made by the member store.  Based             
          on the tear strips, the amount of cash given to Mr. Clawson could           
          be reconciled back to the amount of cash that he returned to                
          petitioner at the end of the show.  Thus, petitioner knew exactly           
          what was done with the money, how many cases were sold, and the             
          cash allowances distributed at the food show.                               
               According to petitioner's bookkeeping entries, Mr. Clawson             
          distributed $35,616 and $82,958 to representatives of the member            
          stores at the 1989 and 1990 food shows, respectively.  Although             

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