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The record contains a credit memo on petitioner's letterhead
to AA&H dated October 25, 1989, bearing an order date of
October 24, 1989, and referring to a "commission credit for
Turkey 25 contract" in the amount of $1,176,691.86. The record
contains a series of documents beginning with an advice dated
July 14, 1988, from Chase Manhattan Bank in the United States to
Chase Manhattan Bank, Istanbul, Turkey, to pay the bid bond under
the second agreement for the sale of 25 trenching machines,
shipping and insurance documents indicating that at least 23 of
the 25 trenching machines under the second sales agreement had
been shipped during the fiscal year ended September 30, 1989,
culminating in petitioner's invoice to the Turkish Government
that, as of February 27, 1990, the balance due petitioner on the
sale of 25 trenching machines amounted to $1,327,980.84, and
that, as of March 9, 1990, petitioner had not yet been paid this
amount.
On petitioner's Form 1120, U.S. Corporation Income Tax
Return, for its fiscal year ending September 30, 1989, petitioner
accrued a deduction of $1,176,692 for commissions. Respondent
disallowed $168,099 of the claimed deduction on the ground that
petitioner had not established that this amount had been paid or
incurred for the purpose designated or that it qualified as a
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