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we have no doubt that Mr. Aydin procured the sales of trencher
machines to the Turkish Government, the record is obscure as to
precisely what services AA&H provided and when it provided them,
so as to give rise to the rights of AA&H or Mr. Aydin to receive
commission payments. There is evidence that at least some
necessary services had not been provided at the end of
petitioner's fiscal year ended September 30, 1989, that the sale
of at least two trencher machines under the second agreement had
not been completed, and that petitioner had not received a
substantial portion of the payments due from the Turkish
Government. The credit memo that petitioner produced does not
demonstrate performance during the taxable year.3 We therefore
2(...continued)
petitioner's witnesses at trial testified that petitioner owed to
AA&H at that point $800,000, including interest, which is
inconsistent with the view that all of the deduction which
respondent allowed, plus this additional disputed amount,
consists entirely of interest. In characterizing the deduction
at trial, Mr. Aydin did not mention that any of it was interest.
3Additionally, it is arguable that petitioner's liability,
to the extent that respondent did not recognize it as a business
expense under secs. 162 and 267, did not arise from an arm's-
length arrangement between petitioner and AA&H and so cannot be
deducted. See Bissey v. Commissioner, T.C. Memo. 1994-540; Van
Valkenburgh v. Commissioner, T.C. Memo. 1967-162.
Petitioner in its trial memorandum said that it had, in
each of the years 1987, 1988, and 1989, a tax loss carryover in
excess of the amount in dispute. Although Mr. Aydin made cursory
mention of this at trial, he did not pursue it then, and
petitioner has made no argument to that effect on brief. We
hold petitioner to have waived the argument and therefore do
not consider whether, in view of Mr. Aydin's acquisition of
(continued...)
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