S. Clark Jenkins and Mary P. Jenkins - Page 14

          fertilizer ingredient is calculated.  This calculation accounts             
          for the amount of fertilizer ingredient paid for but never                  
          received by the consumer.  Second, the value of the deficient               
          fertilizer ingredient is multiplied by a factor of 3 (2 in                  
          Virginia).  We conclude that the legislatures intended this                 
          calculation to account for the reduced crop yield to the                    
          consumer, despite the fact that reduced crop yield may be                   
          difficult, if not impossible, to measure.  In so doing, the                 
          respective legislatures were attempting to compensate for the               
          consumer's actual loss.  See Middle Atl. Distribs. v.                       
          Commissioner, 72 T.C. at 1145.                                              
               Respondent argues that the payments at issue had no, or a              
          negligible, compensatory element because the vast majority of the           
          payments were made to the respective States and not the consumer.           
          We do not find respondent's argument persuasive.  The inability             
          of the departments of agriculture to identify the consumer of the           
          deficient fertilizer and the difficulty in effectuating the                 
          legislation does not alter the legislative intent.                          
               Respondent relies on specific provisions of the fertilizer             
          law to argue that the payments in question were designed to                 
          enforce the law and to punish its violation.  Respondent cites              
          the North Carolina legislature's statement that "it is in the               
          public interest that the State regulate activities" of commercial           
          fertilizer companies.  N.C. Gen. Stat. sec. 106-672 (1993).                 
          Respondent also highlights the commissioner of agriculture's                

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