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Petitioner bears the burden of proof on this issue. Rule 142(a);
Welch v. Helvering, 290 U.S. 111 (1933).
Petitioner's contention that it held the promotional account
funds as a nontaxable intermediary rests upon a number of
decisions of this and other courts. See, e.g., Ford Dealers
Advertising Fund, Inc. v. Commissioner, 55 T.C. 761 (1971), affd.
per curiam 456 F.2d 255 (5th Cir. 1972); Angelus Funeral Home v.
Commissioner, 47 T.C. 391 (1967), affd. 407 F.2d 210 (9th Cir.
1969); Seven-Up Co. v. Commissioner, 14 T.C. 965 (1950).
In Seven-Up Co. v. Commissioner, supra, Seven-Up Co. (7-Up)
manufactured and sold extract for a soft drink to various
franchised bottlers. Each bottler was granted an exclusive sales
territory by 7-Up and controlled its own sales promotion and
local advertising within that territory with the aid of 7-Up.
Certain bottlers decided that it would be more efficient to
conduct promotion and advertising of the beverage on a national
level. In order to fund the national advertising campaign,
participating bottlers were required to pay 7-Up $17.50 per
gallon of extract purchased. The funds were administered by 7-Up
and were to be spent solely for advertising purposes. The funds
6(...continued)
respectively, these amounts are not part of the promotional
account yearend balances.
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