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products from Besco. In response to this request, Tubre informed
petitioner that it was necessary that he discuss the matter with
Kahn and George Steiner (Steiner).3 Besco eventually sought the
advice of its accountant, Edmund Lee (Lee). Tubre claims that
Lee informed him that such an arrangement was acceptable but that
it was imperative to make it appear that the payments were not
based upon Besco’s sales to ASI. Tubre further claims that Lee
instructed him to pay petitioner by check, characterize each
payment as a commission, and issue a Form 1099 Misc. with respect
to each taxable year in which any payment is made.
Following the consultation with Lee, Besco began making
payments to petitioner based on Besco’s sales to ASI's paint
department. Each payment was in the form of a check and was
characterized by Besco as a commission. The frequency, pattern,
and amount of such payments are not determinable from the record;
however, during the 6-year period ending with 1979, Besco paid
petitioner the following amounts in connection with Besco’s sales
to the paint department:
Year Amount
1974 $10,918
1975 14,955
3Prior to December 1974, Besco was owned equally by Steiner,
Tubre, and Kahn. After Steiner retired in December 1974, Tubre
and Kahn became the sole owners of Besco.
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