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Respondent has established that petitioner was not working
for or on behalf of Besco outside ASI during the years at issue.
Respondent also has established that the payments received by
petitioner were kickbacks attributable solely to Besco's sales to
ASI's paint department and not commissions as petitioner contends
were received in exchange for his services outside the paint
department. Therefore, it follows that the expenses allegedly
incurred while generating the "commissions" were not so incurred.
Petitioner was not servicing accounts for Besco or providing
Besco with leads; this activity ceased in the early to mid 1970's
after it proved unsuccessful. Similarly, petitioner was not
advancing Besco's interests inside ASI in departments other than
the paint department. The fact that petitioner conducted a
variety of parties that were attended by multiple guests,
traveled extensively on behalf of ASI, and took a few trips along
with Tubre and Kahn does little to convince us otherwise. Such
activity is common among friends, and petitioner, Tubre, and Kahn
were undoubtedly friends. There is no credible evidence that
suggests that these activities were engaged in by petitioner with
an intention of advancing Besco's interests. That petitioner was
"capable" of advancing Besco's interests is irrelevant.
Accordingly, we conclude that respondent has clearly and
convincingly established that an underpayment exists for each of
the taxable years at issue.
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