9
the ultimate consumer of the deficient fertilizer can be
identified, the penalty is paid to the consumer.
If the ultimate consumer cannot be identified, the penalties
are paid to the State department of agriculture. Often the
ultimate consumer cannot be identified because most fertilizer
samples are taken from dealer storage, and the dealers do not
record who purchased a particular batch of stored fertilizer.
Thus, most penalties are paid to the State department of
agriculture.
The departments of agriculture in North Carolina and
Virginia test approximately 10 percent of the fertilizer sold by
each fertilizer manufacturer. However, if a fertilizer
manufacturer is consistently below standard, the department of
agriculture will test a greater percentage of that manufacturer's
fertilizer.
OPINION
Section 162(a) provides that taxpayers may deduct all
ordinary and necessary trade or business expenses. Subject to
section 162(f), respondent concedes that the payments at issue
meet the requirements of section 162(a) as deductible business
expenses. The payments were normal, usual, and customary, and
they stem from an activity ordinarily to be expected from WSC and
other fertilizer manufacturers. Commissioner v. Heininger, 320
U.S. 467, 471 (1943); Deputy v. Dupont, 308 U.S. 488, 495 (1940).
The payments were appropriate and helpful also for the
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