Affiliated Foods, Inc. - Page 21

                                       - 21 -                                         
          v. Commissioner, 47 T.C. 391, 395 (1967); Seven-Up Co. v.                   
          Commissioner, supra at 977.                                                 
               To establish the terms of the promotional account                      
          agreements, petitioner presented several witnesses, including its           
          chairman, two of its officers, two current employees, and a                 
          former employee.  Each of these individuals testified that                  
          petitioner did not own the promotional account funds.7  But none            
          of these individuals clearly articulated the terms of the                   
          agreements between the vendors and petitioner with respect to the           
          promotional accounts.  Due to the relationship between petitioner           
          and these individuals and the imprecise nature of their testimony           
          with respect to the promotional account agreements, these                   
          witnesses did not aid petitioner in establishing that it was a              
          nontaxable intermediary with respect to the promotional accounts.           
               In addition to the testimonial evidence, petitioner                    
          submitted two written promotional account agreements between                
          petitioner and Colgate.  These agreements indicate that Colgate             
          will reimburse petitioner for its cost of rendering special event           
          promotions, provided petitioner substantiates such expenditures             
          through a "Certificate of Performance" and other supporting                 
          documentation.  The Colgate agreements do not, however, indicate            
          that funds from the promotional accounts can be used to make cash           

          7    We note that such testimony appears inconsistent with                  
          petitioner's treatment of these accounts on its 1988 books.                 





Page:  Previous  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next

Last modified: May 25, 2011