Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 30

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          Winery's lenders.  These arrangements apparently allowed Winery             
          to use available resources to develop itself.  Mr. Groth admitted           
          at trial that "perhaps" Vineyards would have been paid for its              
          grapes sooner had it sold to unrelated parties.                             
               Petitioner contends that Vineyards had a legitimate business           
          purpose for extending such generous payment terms to Winery.  At            
          trial, Mr. Groth, a general partner of Vineyards, testified that            
          he sought to establish a long-term relationship with Winery                 
          because (1) such a relationship would provide Vineyards with a              
          continuing market for its grapes, and (2) the best prices for               
          grapes tended to be paid on long-term contracts.  Mr. Groth also            
          testified that a vineyard would do well if it established a long-           
          term relationship with a successful winery.                                 
               The record indicates that grape growers offered favorable              
          terms to large-quantity purchasers given the prospect of                    
          developing a long-term relationship with those buyers.                      
          Accordingly, we would not consider it unusual if Vineyards                  
          offered some accommodation to Winery to foster such a                       
          relationship.  The record, however, indicates that, when                    
          unrelated parties dealt with each other, the inducement typically           
          offered for a long-term relationship was a lower price per ton of           
          grapes purchased, rather than substantial deferral of payment of            
          the purchase price.7  Accordingly, even if Vineyards had desired            

          7    In petitioner's Sur-Reply Brief, petitioner points to a                

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