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terms of payment to Mr. Aydin or AA&H are "irrevocable, sight
letter of credit confirmed by a major U.S. Bank", and provides
for a delay in payment of no more than 3 work days after funds
are received by petitioner. The schedule of payments for the
three types of machines is identical to that under the first
commission agreement, except that the threshold of the obligation
to make payments with respect to the most expensive, heavy-duty
machine--Model 7036-SD--is raised from $122,000 to $128,000 per
unit. The second commission agreement contains four pairs of
disjunctive references to "Metin Aydin or AA&H International":
The preamble referring to the following terms of payment to
Mr. Aydin or AA&H for "sales he secures for the Government of
Turkey"; petitioner's acceptance of liability "for amounts due"
to Mr. Aydin or AA&H when an acceptable letter of credit is
received; the agreement of Mr. Aydin or AA&H to allow delay in
payment of no more than 3 business days after funds are received
by petitioner; and Mr. Aydin's two signatures on behalf of
himself and AA&H.
In October 1987, Mr. Aydin, having sold trenching machines
for petitioner in previous years as a sales representative,
became the owner and sole shareholder of petitioner. He owned
100 percent of the stock of petitioner during the taxable year
ended September 30, 1989. His acquisition of petitioner occurred
against expert advice questioning his wisdom in doing so.
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