- 33 -
over these funds, as evidenced by the return of any "unused"
cash. Thus, these amounts must also be included in petitioner's
income. See, e.g., North Am. Oil Consol. v. Burnet, 286 U.S.
417, 424 (1932); Ford Dealers Advertising Fund, Inc. v.
Commissioner, supra; Latimer v. Commissioner, 55 T.C. 515, 520
(1970).10 Accordingly, we sustain respondent's determination.
Issue 3. Section 162 Deduction
Petitioner argues that, if the amounts distributed to the
shareholders at the 1989 and 1990 food shows from the promotional
accounts and check-cashing transactions are includable in its
income, the difference between the funds received from Western,
which petitioner concedes are income, and those returned by Mr.
Clawson at the end of the respective food shows are deductible
business expenses incurred by petitioner. Petitioner asserts
that these amounts were paid for the purpose of promoting the
success of the food shows, and therefore are deductible under
section 162. Respondent argues that such a deduction is not
allowable. Petitioner bears the burden of proof on this issue.
Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992).
10 Petitioner cannot substantiate a patronage dividend
deduction for the amounts distributed at the food show, because
it has destroyed the records that documented the products
purchased, the payments made, and the shareholders who received
the payments. Sec. 1388.
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