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companies to build in Africa.4 Dr. Young and petitioner are
BarSon's president and secretary, respectively, and they each own
50 percent of its stock. BarSon is a cash method taxpayer, and
its taxable year ends on March 31.
On November 19, 1979, BarSon and Ashland Oil, Inc.
(Ashland), entered a written agreement under which BarSon's
managing directors (petitioner and Dr. Young) or other key
employees would advise Ashland on starting business abroad
(including the requirements for purchasing crude oil in foreign
countries) in exchange for a daily fee of $750 plus expenses.5
The agreement did not contain a provision for Ashland to pay
BarSon commissions on the actual purchase of oil by Ashland.
Petitioner and Dr. Young, on behalf of themselves, entered into a
separate oral agreement with Ashland under which Ashland would
pay commissions to petitioner and Dr. Young for any oil purchased
as a result of their efforts. Petitioners have never reported
any income on their personal income tax returns for commissions
4 Dr. Young is the brother of Andrew Young, the U.S.
ambassador to the United Nations during the Carter
administration. The occurrences described below began at or
about the time when Andrew Young led an official U.S. trade
delegation (with petitioner and Dr. Young) to Africa to discuss
oil and other matters.
5 BarSon and Ashland amended this agreement on Feb. 1, 1981,
to increase the daily rate to $1,250, with a minimum of $15,625
per month. From 1979 until 1981, Ashland paid BarSon at least
$713,765 under this agreement. These payments were deposited
into BarSon's bank accounts.
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Last modified: May 25, 2011