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The expenses used to offset the kickback payments are
attributable to petitioner's alleged activity on behalf of Besco.
This is implicit by petitioner's use of the Schedule C to
identify the income received from Besco and to claim the alleged
expenses as deductions against such income. Respondent, however,
has established through the credible testimony of both Tubre and
Kahn that petitioner did essentially nothing on behalf of Besco
outside ASI during the years at issue. Much the same can be said
with respect to petitioner's activity within ASI. Aside from
causing the paint department to purchase chemicals from Besco,
petitioner did little else not required by his position. At
best, the friendship between petitioner and Tubre facilitated
Tubre's activity throughout ASI by making access to the facility
easier than Tubre would have otherwise experienced absent such
friendship. Further, respondent has shown that Besco did not
consider the payments it made to petitioner to be anything other
than kickbacks tied exclusively to the purchases of Besco
products made by the paint department. Petitioner's contention
otherwise is not convincing. Tubre viewed the payments as
kickbacks when he sought advice regarding such payments from
Besco's accountant. In fact, that the payments would be
considered kickbacks was his principal concern. Besco,
nonetheless, followed the accountant's advice and packaged the
payments in a disguise. Yet simply disguising the payments as
commissions did not convert them into commissions.
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